UK Living Standards Set for Slowest G7 Growth, IMF Warns
Britain's pursuit of improved living standards is facing a significant challenge, with the International Monetary Fund (IMF) forecasting the slowest pace of growth per person among G7 nations by 2026. The stark prediction deals a blow to the government's ambitions and raises concerns about the UK's economic trajectory.
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According to the IMF's latest assessments, higher inflation and a sluggish economy are expected to curb growth in GDP per person to a mere 0.5 per cent in 2026. This figure lags considerably behind other major economies, with the United States projected to achieve 1.8 per cent growth, Japan 1.2 per cent, and the Eurozone 0.9 per cent.
GDP per head, a key indicator often used to gauge living standards, has already seen a decline in the UK over the past two years. This downturn has been attributed, in part, to rapid population growth outpacing economic expansion.
The Prime Minister had made raising living standards a cornerstone of his government's agenda, setting an ambitious target for the UK to deliver the fastest per-capita GDP growth in the G7 for two consecutive years by the end of the current parliamentary term. However, the IMF's forecasts suggest this goal is likely to remain out of reach, with only South Africa expected to experience slower growth per person next year among the analysed economies.
Adding to the economic headwinds, the IMF has also revised down its overall growth prospects for the UK. This downgrade comes just weeks before Chancellor Rachel Reeves is expected to announce further fiscal measures in the upcoming Budget, potentially involving tax increases. The fund's latest outlook casts a shadow over the government's fiscal plans and its ability to stimulate robust economic expansion.
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According to the IMF's latest assessments, higher inflation and a sluggish economy are expected to curb growth in GDP per person to a mere 0.5 per cent in 2026. This figure lags considerably behind other major economies, with the United States projected to achieve 1.8 per cent growth, Japan 1.2 per cent, and the Eurozone 0.9 per cent.
GDP per head, a key indicator often used to gauge living standards, has already seen a decline in the UK over the past two years. This downturn has been attributed, in part, to rapid population growth outpacing economic expansion.
The Prime Minister had made raising living standards a cornerstone of his government's agenda, setting an ambitious target for the UK to deliver the fastest per-capita GDP growth in the G7 for two consecutive years by the end of the current parliamentary term. However, the IMF's forecasts suggest this goal is likely to remain out of reach, with only South Africa expected to experience slower growth per person next year among the analysed economies.
Adding to the economic headwinds, the IMF has also revised down its overall growth prospects for the UK. This downgrade comes just weeks before Chancellor Rachel Reeves is expected to announce further fiscal measures in the upcoming Budget, potentially involving tax increases. The fund's latest outlook casts a shadow over the government's fiscal plans and its ability to stimulate robust economic expansion.
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