UK Economy on the Mend, Says IMF – But Bumps in the Road Remain

The International Monetary Fund (IMF) Executive Board has concluded its 2025 Article IV Consultation assessing that the UK economy is recovering, with modest growth expected this year and stronger momentum building into 2026. But global uncertainty, cautious consumers, and inflation pressures could still slow things down.

The IMF forecasts growth of 1.2% in 2025, rising to 1.4% in 2026. Business investment is picking up, and public spending from the last budget is helping support the recovery.

Inflation still a concern – but expected to ease

While inflation is expected to average 3.2% this year, the IMF estimates that it should fall back to 2.3 percent next year.

Government finances: on the right track, if plans hold

The IMF says the government’s current spending and borrowing plans are about right – encouraging growth while keeping debt in check. But it stressed the importance of sticking to the deficit reduction plan over the next five years.

Interest rates: gradual cuts make sense

With inflation still above target and the outlook uncertain, the IMF supports the Bank of England’s cautious approach to cutting interest rates.

What this means for your business

The UK economy may be turning a corner, but uncertainty remains. Staying agile, keeping an eye on inflation, and planning for gradual interest rate shifts will be key over the coming year. The outlook is improving – but it’s not without risk.

If you’d like support navigating the road ahead, reviewing your financial plans, or making the most of emerging opportunities, our team at Wilds is here to help. Get in touch for straightforward, proactive advice tailored to your business.