LONDON — The U.K.’s growth forecast was slashed on Tuesday as the International Monetary Fund (IMF) handed some bleak news to Chancellor Rachel Reeves just as she arrives in Washington, DC.
In its latest World Economic Outlook, the IMF, which is hosting global finance ministers in the U.S. capital this week, revised U.K. growth for 2025 down from 1.6 to 1.1 percent, and down 0.1 percentage points to 1.4 percent for 2026.
The IMF warned the global economy is at a “critical juncture” amid U.S. President Donald Trump’s ongoing trade war.
The latest figures put Britain’s GDP growth this year lower than Canada (1.4 percent) and the U.S. (1.8 percent), but above Japan (0.6 percent), France (0.6 percent), Italy (0.4 percent), Germany (0 percent), and the Euro area (0.8 percent).
The international body said the U.K.’s downgrade from January’s forecast is due to “a smaller carryover from 2024,” the impact of recent U.S. tariffs, an increase in government bond yields, and weaker private consumption amid higher inflation.
The U.K.’s inflation forecast was hiked by 0.7 percentage points, compared to 0.4 percentage points in other advanced economies. The IMF pointed to the U.K. as an outlier along with the U.S., where inflation is predicted to increase by 1 percentage point compared to the January forecast.
The figures will come as a blow to Reeves, who has already been hit by U.K. watchdog the Office for Budget Responsibility halving its 2025 U.K. growth forecast, and whose boss, Prime Minister Keir Starmer, has made kick-starting the stagnant U.K. economy a central mission of his government.
For now the IMF predicts global growth will drop to 2.8 percent in 2025 and 3 percent in 2026, down from an estimated 3.3 percent in 2024.
Tuesday’s forecast is based on policy decisions as of April 4, before the U.S. decided to pause some reciprocal tariffs for 90 days. Had Trump not announced his April 2 tariff spree at all, the IMF said it would have forecast global growth to be 3.2 percent for both 2025 and 2026.
“Countries should work constructively to urgently resolve trade tensions and promote clear and transparent trade policies to stabilize expectations, avoid investment distortions, and reduce volatility while avoiding steps that could further harm the world economy,” the IMF wrote.
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