IMF Staff Country Reports

The 2024 Article IV Consultation discusses that the UK economy is approaching a soft landing, following a mild technical recession in 2023. A modest recovery is projected, with 0.7 percent growth in 2024, strengthening to 1.5 percent in 2025. Inflation has fallen rapidly from double digit levels last year in the context of easing energy prices and tight policies. Assuming wage and services inflation continue to moderate from their current elevated levels, inflation should return durably to target in the first half of 2025. The overarching policy objective is to maintain price and financial stability, durably lift per capita growth, and address pressing public spending needs while credibly stabilizing debt. Macroprudential settings are appropriate but continued close monitoring of credit conditions and financial stability risks, including stringent stress tests, is merited in future calibrations. IMF supports a redoubling of policy efforts to credibly achieve the UK green transition targets and maintaining a cautious approach toward industrial policy interventions.