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The UK economy will grow more than previously thought, according to the International Monetary Fund (IMF), which has upgraded its latest forecast.
But it warned trade tensions linked to US tariff plans will reduce UK economic growth next year.
The Washington-based UN financial agency said the UK economy will expand 1.2% this year and “gain momentum next year”.
The upgrade in forecasts, however, is slight, up from an expected 1.1% announced in April as the world reeled from the global trade war sparked by US President Donald Trump’s tariffs.
That April figure was a 0.5% downgrade from the projected 1.6% growth for 2025 the IMF foresaw in January and the 1.5% forecast issued in October.
It means the IMF expects the UK economy to grow less this year than it forecast in October and January.
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Tariffs warnings
This anticipated lower growth is largely due to tariffs – taxes on goods imported to the United States – and the uncertainty caused by shifting trade policy in the US, the world’s largest economy.
While many tariffs have been paused until 8 July, it’s unclear if deals will be in place by then and if pauses may be extended.
The effect of this has been quantified as a 0.3 percentage points lower growth by 2026 in the UK, the IMF said.
The organisation held its prediction that the UK economy will grow by 1.4% in 2026.
“The forecast assumes that global trade tensions lower the level of UK GDP by 0.3% by 2026, due to persistent uncertainty, slower activity in UK trading partners, and the direct impact of remaining US tariffs on the UK,” it said.
It…
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