The International Monetary Fund raised its 2024 growth forecast for the U.K. to 0.7% from 0.5%, providing a boost to the country’s new government. The IMF maintained its prediction of 1.5% growth for the U.K. in 2025 in its July update of the World Economic Outlook. After two years of stagnation and a shallow recession in the second half of 2023, the U.K. saw GDP growth of 0.4% in May, surpassing analyst expectations. Events like the Euro 2024 soccer championship and Taylor Swift’s Eras Tour are expected to further stimulate economic activity.
Goldman Sachs adjusted its 2025 U.K. economic forecast to 1.6%, citing the fiscal plans of the new Labour government led by Prime Minister Keir Starmer. Deutsche Bank also revised its U.K. outlook, now expecting GDP growth of 1.2% this year, up from the previous forecast of 0.8%. Sectors like professional services and construction showed strength in May, with the Euros tournament anticipated to boost hospitality and leisure.
Jefferies analysts noted that the U.K.’s parliamentary stability and regulatory reforms could enhance the country’s asset attractiveness. The Bank of England is anticipated to reduce interest rates in the near future, with U.K. inflation meeting the central bank’s 2% target in May. The IMF upgraded growth forecasts for the euro zone, Spain, and China, while lowering the U.S. economy forecast. Global growth is projected at 3.2% this year, with strong exports from Asia supporting global activity and trade. The IMF cautioned that the services sector was impeding the disinflation process, complicating monetary policy decisions.
