IMF Executive Board Concludes 2026 Article IV Consultation with United Kingdom
IMF News, July 16, 2026
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- Published: July 16, 2026
Growth outlook and inflation
- "The UK economy has remained resilient, but the war in the Middle East has dampened near-term growth prospects. Growth is projected to slow to 1.0 percent in 2026 before gradually recovering as the shock dissipates."
- Growth picked up to 1.4 percent in 2025, driven by a recovery in private consumption and investment.
- "Headline inflation is projected to peak above 3.5 percent toward end-2026, before declining and returning to target towards end-2027."
- "The pass-through to core inflation should be more limited, given the weak labor market, slow wage growth, and a negative output gap."
- Bank of England policy: "the BoE gradually brought the Bank Rate down to 3.75 percent by February 2026."
- Monetary policy guidance: "Monetary policy should stay sufficiently restrictive to contain second-round effects from higher energy prices, with decisions remaining data dependent given heightened uncertainty."
Fiscal policy, structural reforms, and financial sector
- Fiscal strategy: "The authorities' fiscal strategy remains appropriate, striking a good balance between deficit reduction and growth-friendly spending."
- FY2025/26: "The fiscal stance tightened significantly in FY2025/26, marking the first year of the authorities' medium-term consolidation plan."
- Directors' assessment: the fiscal strategy "appropriately balances debt stabilization with growth‑friendly spending" and recent changes to the fiscal framework "strengthen fiscal policy predictability."
- Energy shock response: "The response to the energy shock has been prudent and should remain tightly targeted, temporary, and budget‑neutral."
- Medium- to long-term fiscal pressures: "rising spending pressures from ageing, defense, and the energy transition will require difficult choices and greater focus on containing spending growth and enhancing efficiency."
- Structural reform agenda: welcomed; priority areas include addressing skills shortages, improving labor mobility and migration policies, and enabling artificial intelligence adoption.
- Implementation caveat: "Success will hinge on prioritization, sequencing, and sustained delivery, supported by systematic monitoring and transparent progress reporting."
- Financial sector: "the UK financial system appears resilient"; authorities play a "leading international role in addressing risks from the nonbank financial sector." Directors support ambition to make the financial sector "a stronger engine of investment and productivity" and advise a cautious approach to regulatory reform.
- AML/CFT: Directors "encouraged continued efforts to strengthen the AML/CFT regime."
- Forthcoming FSAP: "an opportunity for a more detailed assessment."
Risks and possible upside factors
- Downside risks:
- "The main risk is that disruptions to energy supply persist."
- "Larger second-round effects on inflation could necessitate a more restrictive monetary stance, tightening credit conditions and slowing growth."
- Policy uncertainty, a deteriorating external environment, further trade tensions, and tighter global financial conditions.
- Upside factors:
- Household savings drawdowns.
- Productivity gains from faster-than-expected AI adoption.
- Policy recommendation: "Staying the course on deficit reduction and the structural reform agenda will support resilience by providing policy stability that anchors confidence and supports investment."
Executive Board Assessment (selected conclusions)
- Commended the authorities for prudent policies enabling resilience despite repeated external shocks.
- Highlighted elevated uncertainty and weak productivity gains weighing on long‑term growth.
- Emphasized sustaining the reform strategy to "provide policy stability, anchor confidence, support investment, and raise productivity and living standards."
- Monetary policy: should "remain sufficiently restrictive to prevent higher energy prices from becoming entrenched in core inflation and wages"; decisions "should remain data‑dependent and be taken meeting by meeting."
- Supported BoE efforts to strengthen communication and the "ongoing transition to a repo‑led, demand‑driven liquidity framework."
- Welcomed the authorities' international role and support for multilateral cooperation.
Key statistics (selected values from Table 1; percentage change unless otherwise indicated)
- Real GDP:
- 2021: 8.5
- 2022: 5.1
- 2023: 0.3
- 2024: 1.0
- 2025: 1.4
- 2026: 1.3
- 2027: 1.7
- 2028: 1.5
- Domestic demand (selected):
- 2021: 9.2
- 2022: 4.9
- 2024: 2.0
- 2025: 1.2
- Private domestic demand (selected):
- 2021: 7.7
- 2022: 7.6
- 2023: -0.4
- 2024: 0.1
- 2025: 0.9
- 2026: 1.6
- CPI, period average (selected):
- 2021: 2.6
- 2022: 9.1
- 2023: 7.3
- 2024: 2.5
- 2025: 3.4
- 2026: 3.2
- 2027: 2.4
- CPI, end-period (selected):
- 2021: 5.4
- 2022: 10.5
- 2023: 4.0
- 2024: 3.5
- Unemployment rate (in percent) 1/:
- 2021: 4.6
- 2022: 3.8
- 2023: 4.1
- 2024: 4.3
- 2025: 5.6
- 2026: 5.3
- 2027: 4.8
- 2028: 4.5
- Gross national saving (percent of GDP) (selected):
- 2021: 17.8
- 2022: 17.2
- 2023: 15.4
- 2024: 16.0
- 2025: 16.5
- 2026: 16.2
- 2027: 16.7
- 2028: 16.9
- 2029: 17.7
- 2030: 18.0
- Gross domestic investment (percent of GDP) (selected):
- 2021: 18.6
- 2022: 19.1
- 2023: 18.9
- 2024: 19.0
- 2025: 19.3
- 2026: 19.6
- 2027: 19.7
- 2028: 19.9
- Public sector overall balance (fiscal year, percent of GDP) (selected) 2/:
- 2021: -5.2
- 2022: -4.8
- 2023: -4.9
- 2024: -4.3
- 2025: -4.0
- 2026: -3.3
- 2027: -2.8
- 2028: -2.0
- 2029: -1.8
- Public sector primary balance (selected):
- 2021: -3.1
- 2022: -1.2
- 2023: -1.9
- 2024: -2.4
- 2025: -1.4
- 2026: -0.9
- 2027: -0.2
- Public sector cyclically adjusted primary balance 3/ (selected):
- 2021: 0.0
- 2022: -1.7
- 2023: -1.6
- 2024: -2.2
- 2025: -1.1
- 2026: -0.5
- 2027: 0.6
- Public sector net financial liabilities (PSNFL) 4/ (selected):
- 2021: 78.5
- 2022: 79.0
- 2023: 79.8
- 2024: 81.1
- 2025: 82.8
- 2026: 83.9
- 2027: 84.4
- 2028: 84.7
- 2029: 83.0
- 2030: 82.1
- M4 (end-period, 12-month percent change): 6.3 (2021)
- Net lending to non-fin private sector (end-period, 12-month percent change) (selected):
- 2021: 2.8
- 2022: 2.9
- 2023: 3.3
- 2024: 3.6
- House Price Index (HMLR, end-period) (selected):
- 2021: -2.7
- 2022: 3.1
- 2023: 1.8
- Interest rates (percent; year average) (selected):
- Bank Rate (selected years): 4.7; 3.0
- Long Term Interest Rate (selected): 0.8
- 2y mortgage rate (75% LTV fixed rate,average): 4.4
- 5y mortgage rate (75% LTV fixed rate,average): 4.2
- Current account balance (percent of GDP) (selected):
- 2021: -0.8
- 2022: -3.6
- 2023: -3.0
- 2024: -3.2
- 2025: -2.9
- 2026: -2.1
- Trade balance (percent of GDP) (selected):
- 2021: -0.7
- 2022: -1.3
- 2023: -0.6
- Exports of G&S (volume change in percent) (selected):
- 2021: 15.2
- 2022: -2.3
- 2023: 2.1
- 2024: 1.9
- Imports of G&S (volume change in percent) (selected):
- 2021: 13.9
- 2022: 2.7
- 2023: 1.1
- Terms of trade (percent change) (selected): 0.2 (2021)
- Reserves (end of period, billions GBP) (selected):
- 2021: 143.4
- 2022: 146.7
- 2023: 139.6
- 2024: 139.5
- 2025: 159.1
- 2026: 164.7
- 2027: 170.1
- 2028: 176.2
- 2029: 182.3
- 2030: 188.5
- 2031: 194.6
- Nominal GDP (billions GBP) (selected):
- 2021: 2,323
- 2022: 2,581
- 2023: 2,752
- 2024: 2,891
- 2025: 3,037
- 2026: 3,144
- 2027: 3,246
- 2028: 3,362
- 2029: 3,479
- 2030: 3,597
- 2031: 3,714
- Nominal GDP (billions USD) (selected):
- 2021: 3,195
- 2022: 3,193
- 2023: 3,422
- 2024: 3,695
- 2025: 4,002
IMF Executive Board press release, July 16, 2026.