According to the January 2025 update to the IMF Global Economic Outlook, the UK economy is expected to grow by 1.6% this year and 1.5% in 2026.
The International Monetary Fund (IMF) has upgraded its economic outlook for the UK and now forecasts it will be the fastest growing economy in Europe.
According to the January 2025 update to the IMF Global Economic Outlook, the UK economy is expected to grow by 1.6% this year and 1.5% in 2026.
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This compares to the previous outlook in October 2024, when the IMF forecast growth of 1.5% for the current year.
Chancellor Rachel Reeves said that, apart from the US, the UK was the only G7 economy to have its growth forecast upgraded for the year.
Additionally, she noted that the IMF's revised economic outlook meant the UK is "forecast to be the fastest growing major European economy over the next two years".
She added: "I will go further and faster in my mission for growth through intelligent investment and relentless reform, and deliver on our promise to improve living standards in every part of the UK through the Plan for Change."
Overall, the IMF expects the global economy to grow 3.3% in both 2025 and 2026, up from its forecast of 3.2% growth for 2025.
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Advanced economies are expected to grow by 1.9% in 2025 and 1.8% in 2026, up from a previous estimate of 1.8% growth for this year.
Emerging markets and developing economies are also forecast to experience significant economic growth over the next two years, with estimates of 4.2% in 2025 and 4.3% in 2026, with the latter revised up from 4.2%.
Among those, India is estimated to be the fastest growing economy the group, with the IMF forecasting growth of 6.5% for both years; followed by China's 4.6% growth in 2025 and 4.5% in 2026.
However, the IMF said an "intensification of protectionist policies" – with an expected new wave of tariffs – alongside looser fiscal policy in the US, the risk of renewed inflationary pressures and the potential intensification of geopolitical tensions could all impact economic growth and force central banks to diverge on monetary policy.
