UK growth to slow this year in blow to Starmer’s economic legacy, says IMF
UK growth will slow this year according to latest forecasts from the International Monetary Fund (IMF) that deal a blow to Sir Keir Starmer’s economic legacy.
With the Prime Minister’s days in Downing Street numbered, the IMF projections show Labour remains well behind in its manifesto ambition to achieve the fastest growth in the G7 group of major advanced economies.
Instead, Britain is expected to grow by just 1 per cent this year, down from 1.4 per cent in 2025.
And while that puts the UK ahead of Germany, France, Italy and Japan, it is slightly behind Canada and well short of America’s expected growth rate.
That is despite Sir Keir’s claim as he announced his resignation last month that Britain’s economy was now stronger and ‘growing faster than our peers’.
In fact, while the UK did enjoy stronger growth than other G7 countries in the first quarter of this year, it has not led the pack in any other quarter since Labour came to power.
Sir Keir Starmer claimed the UK was ‘growing faster than our peers’
And the IMF’s latest projections suggest that the relatively strong performance at the start of 2026 is not expected to extend over the rest of the year.
Many businesses say that far from boosting growth, Labour’s tax hikes, workers’ rights policies and minimum wage increases – under Sir Keir and his Chancellor Rachel Reeves – are crushing the private sector.
The latest forecast for the UK is published as part of the IMF’s World Economic Outlook update. It is unchanged from the forecast published following an IMF visit to Britain in the spring. Growth is expected to recover to 1.3 per cent in 2027.
It has previously said that Britain – as a net importer of energy – is more exposed than other major economies to the impact of the Iran war, which has pushed up oil and gas prices.
Critics say that Ed Miliband’s net zero policies are making the problem worse by holding back investment in North Sea drilling.
By contrast the US, which is a net energy exporter and is also being buoyed by a tech boom, is much less exposed to the Iran war shock. Its economy is expected to grow by 2.3 per cent this year and 2.2 per cent next year.
Globally, the IMF report revises the growth outlook slightly lower and inflation slightly higher as a result of the Middle East conflict.
Despite a deal to end the war, it warns that risks to the outlook remain ‘tilted to the downside’.
‘The possibility of renewed Middle East conflict looms large and could extend commodity price volatility, further threaten supply chains, raise prices, and weigh on financial conditions,’ the IMF said.
Tory shadow chancellor Sir Mel Stride said: ‘The IMF’s forecast shows growth slowing – yet another reminder that this Labour government is out of its depth.
‘With more taxes and borrowing on the horizon under Burnham, Labour look set to double down on all of the mistakes they have already made.’
But Ms Reeves welcomed the IMF forecasts, which confirmed an upgrade for the UK by the IMF in May.
She said: ‘The UK is the only G7 country where the growth forecast this year has been upgraded by the IMF. This shows we have the right economic plan to build a stronger and more secure economy.
‘Our choices mean the economy is in a better position to deal with the costs of the war in Iran while kickstarting long-term growth by focusing on our three big choices – boosting AI, regional growth and strengthening trade with the EU.’
