MNI BRIEF: UK Faces Growth Risks, But Inflation to Slow - IMF

Tighter-than-expected financial conditions, combined with rising precautionary saving by UK households, could hinder the rebound in private consumption and slow economic recovery, the International Monetary Fund said in its latest review of the UK economy on Friday.

Persistent global trade uncertainty could also weigh on UK growth, by weakening world economic activity, disrupting supply chains, and undermining private investment, the Article IV document showed.

A significant rise in commodity prices risks intensifying inflationary pressures, the IMF said, while the pickup in headline inflation that started in the second half of 2024 is expected to continue as a result of regulated price increases, the employer NIC rate hike, and waning base effects from energy prices. The rise in inflation should nonetheless be temporary, and average CPI inflation is projected to decline from 3.2% in 2025 to 2.3% next year. (See MNI POLICY:  BOE Needs Scenario Rate Paths - Top Economists)

UK Economic Outlook

Source: IMF