Chancellor Rachel Reeves has declared that the UK economy is poised to "turn a corner" this year, following a significant upgrade to the nation's growth prospects by the International Monetary Fund (IMF).
The IMF's latest World Economic Outlook, published on Monday 19 January 2026, projects that the UK will be the fastest-growing economy among the G7 nations in Europe for both 2026 and 2027.
IMF Forecasts Outperform European Peers
The fund anticipates UK Gross Domestic Product (GDP) will expand by 1.3 per cent in 2026, accelerating to 1.5 per cent in 2027. While this trails behind the projected global growth rate of over 3 per cent, it places Britain ahead of European counterparts like Germany, France, and Italy within the G7 bloc.
In the broader G7 context, only the United States and Canada are expected to see stronger growth than the UK in the coming years. Chancellor Reeves welcomed the revised figures, stating they show the government's economic plan is beginning to deliver.
Shadow Chancellor Warns of 'Flatlining' Reality
However, the optimistic outlook from Downing Street was swiftly challenged by the opposition. Shadow Chancellor Sir Mel Stride criticised the government for celebrating what he termed a "minor uptick".
He argued that the underlying economy remains in a dire state and is effectively flatlining, suggesting the chancellor should be more forthright about the challenges still facing households and businesses.
Global Risks Loom on the Horizon
Despite the improved forecast, the IMF report and economic commentators have highlighted substantial external risks that could derail progress. The most prominent threat is the potential for a major disruption to international trade.
Concerns are mounting that new tariffs threatened by former US President Donald Trump, should he return to office, could severely impact the UK. Experts warn such a move has the potential to plunge the country into recession, completely negating the modest growth now anticipated.
The coming months will be a critical test of whether the UK's economic resilience can withstand these global headwinds and sustain the growth trajectory now mapped out by the IMF.
