The International Monetary Fund (IMF) has projected that the United Kingdom will achieve stronger economic growth next year than most of its G7 counterparts, positioning it as a leader among European nations in the group.
UK Set for Strong Performance in G7 Rankings
According to the influential economic body's latest report, released on Monday 19 January 2026, Britain's GDP growth in 2027 is anticipated to trail only that of the United States and Canada within the G7. The forecast suggests the UK will surpass the economic expansion expected in Japan, Italy, and France, while matching the growth rate projected for Germany.
The IMF maintained its specific UK growth forecasts for 2026 and 2027 at 1.3 per cent and 1.5 per cent respectively. However, it did make a slight upward revision to its prediction for 2025, nudging it up to 1.4% from a previous estimate of 1.3%.
Inflation and Global Resilience
In a significant shift from earlier warnings, the IMF now reports that UK inflation is expected to return to its target by the end of 2026. This adjustment is attributed to a weakening labour market applying downward pressure on prices.
The report highlighted that the global economy has demonstrated "remarkable resilience". It noted signs that technology-related investment is contributing to growth in Britain, although not on the same scale as the boom witnessed in the United States. Global growth is projected at 3.3% in 2026 and 3.2% in 2027.
Political Reaction to the Forecasts
Chancellor of the Exchequer Rachel Reeves seized on the report as evidence of economic progress. "After years of decline, this is the year the country turns a corner," she stated.
Reeves emphasised that the IMF has upgraded UK growth forecasts for the third consecutive time since April 2025. "Putting us on course to be the fastest growing European G7 economy this year and next," she added, crediting government stability and unlocked investment for defying earlier pessimistic forecasts and easing cost-of-living pressures.
The response from the opposition was notably less celebratory. Shadow Chancellor Sir Mel Stride dismissed the minor forecast upgrade, stating: "A 0.1% uptick is not a triumph and the fact Rachel Reeves is celebrating it shows how desperate she has become. The economy is flatlining."
The contrasting reactions underscore the ongoing political debate surrounding the nation's economic health, even as international bodies point to a gradual recovery and improving comparative standing among the world's advanced economies.
