13 October 2026
If you are covering the latest IMF World Economic Outlook and the upgrade to UK growth for 2026, please find below a comment from Tim Armitage, investment strategist at Quilter Cheviot:
“The UK has confounded economic expectations for the year and as a result has had a nice small upgrade to its 2026 forecasts from the International Monetary Fund. There has been a recent habit from the economy of starting the year strongly before fading badly in the second half, so this result breaks that trend and will be music to the ears of the Chancellor ahead of the Budget in a little over two weeks’ time.
“The IMF has previously said the UK was most exposed developed economy to the conflict in the Middle East and the inflationary impacts that have ensued. This has clearly not proven to be the case and there are actually other green shoots too, particularly given the current backdrop of rising global bond yields.
“The UK is seen as one of the only major economies to be bringing down its deficit over the coming years, something that would give the government some breathing room. It will be interesting to see if markets believe this to be the case given the yield premium gilts have faced in recent years relative to peers. Certainly focus now appears to be trained on the US and France and whether or not their fiscal positions are becoming unsustainable, so the more the UK can stay under the radar the better from a market perspective.
“That said, in this volatile and uncertain world, things are never straightforward. Growth for next year has been downgraded for the UK, slowing to 1.2% as rising energy costs and interest rates bite. Indeed, for as along as conflict continues in the Middle East there will be increasing inflationary pressure put on the UK and the Bank of England will have to consider further rate rises. At least one is expected this year, with more to come in the first half of 2027, but the worry then starts to become how long the economy can withstand tight monetary policy conditions for.”
