UK growth forecast upgraded but energy prices and rates to hit in 2027

The UK economy is forecast to grow by more than previously expected this year before higher energy prices and interest rates hit the economy in 2027, the International Monetary Fund (IMF) said.

The organisation's latest report, which is closely watched by the government, said the UK economy would expand by 1.3% in 2026, up from the 1% it predicted in July, before slowing in 2027.

Economies across the world have proved more resilient to the energy price shock caused by the US-Iran war, the IMF said, but it warned the economic fallout from the conflict remained "highly uncertain".