IMF downgrades UK growth forecast amid Trump tariffs

The International Monetary Fund (IMF) has sharply downgraded its forecasts for UK economic growth, citing the impact of newly announced US tariffs, higher inflation, and rising energy costs as key factors. UK GDP is now expected to grow by only 1.1% in 2025, down from the previous 1.6% forecast, with a further downgrade projected for 2026. The IMF warned that these trade tensions and policy uncertainties are likely to disrupt global economic activity and have already led to increased government borrowing costs for the UK. Chancellor Rachel Reeves acknowledged the challenging outlook but emphasized that the UK remains the fastest-growing European G7 country and highlighted the government's ongoing reforms aimed at boosting long-term growth. The report also noted a significant rise in UK inflation, expected to reach 3.1% this year, driven primarily by regulated energy and utility prices. Despite the downgrades, the IMF slightly improved its long-term growth forecasts for the UK beyond 2028.