IMF: UK Economy Growing Faster than Expected

To avoid an uncontrollable increase in public debt, the British government has to raise 30 billion pounds through tax increases or spending cuts

Rishi Sunak

Given the faster-than-expected recovery in growth, the UK economy is approaching a soft landing after a moderate technical recession in 2023. This conclusion was reached by a mission of the International Monetary Fund (IMF), which visited the Brexit country, having analyzed the current situation and prospects for the British economy. This estimate comes after an update to the UK’s growth forecast for 2024-2025. IMF experts estimate that the real GDP growth of the UK in 2024 will be 0.7%, i.e., +0.2% compared to the previous estimate, while in 2025, the British gross domestic product is expected to grow by another 1.5%.

“Consumer inflation is falling faster than expected last year. As monetary policy is about to reach a turning point, the timing and pace of rate cuts must carefully balance the risks of both premature and late easing,” IMF experts wrote in a statement.

According to the Monetary Fund, due to the UK general election scheduled for late 2024 to January 2025, the next UK government will have to find 30 billion pounds (35 billion euros) through “tax increases or spending cuts to contain the growth of public debt.” Whoever wins the next parliamentary elections between the Conservatives and Labor, IMF officials stressed, the country will face a “difficult choice.” Monetary Fund experts have cautioned current Prime Minister Rishi Sunak against “further tax cuts in the short term” despite improving economic growth prospects.