Rachel Reeves has delivered another major blow to his construction or failure next month, as the IMF warned that British inflation was due to rise to the highest G7 in 2025 and 2026.
The besieged Chancellor has now been trying to boost economic growth last year, and the latest outlook report suggests that British households are expected to face the highest price inflation rate among the G7 Group of advanced economies, part of which is led by rising food prices and hospitality.
The influential economic institution said prices in the UK are increasing sharply than expected than expected. It expects British inflation to be 3.4 percent in 2025 and increases 3.2 percent from its previous forecast.
Forecasts also show that British inflation will drop slightly to 2.5 percent next year, but this is still more than 2.3 percent early this year. But this has also increased its forecast of growth as Britain’s forecast of growth for this year, while reducing its forecast for 2026 among labor market concerns.
The IMF report, described as “makeup”, doubts the hopes of the Central Bank of England to restore interest rates to the 2 % target target rate in the near future.
Higher interest rates can also increase black hole in public finances by adding pressure to increase pension in line with trilogy guarantees, as well as increasing the risk of public sector payment, which is previously estimated at between £ 30 billion and £ 40 billion.
The latest IMF report comes hours after a group of leading economists described Ms. Reeves as “frustrated” while Britain runs structural deficits, and a line of work is whether it imposes wealth tax or makes a manifesto -insurance tax on the taxpayer.
In its global economic outlook, which is gathered in Washington, DC, in its global economic outlook, the IMF emphasized that inflation is being collected in the United Kingdom and the United States.
The latest statistics on the National Bureau of Statistics (OK) showed that the UK consumer price (CPI) showed 3.8 % in July and August, showing the highest level since January 2024. The highest level is specifically linked to accelerating food prices and hospitality, with jobs and industry groups claim that this is partly driven by higher costs and labor taxes.
Meanwhile, the British economy is expected to grow 1.3 percent this year, after the first half. This indicates progress against the previous IMF forecast of 1.2 %. However, the IMF has now reduced its growth for the next year from 1.4 percent to 1.3 percent, as global trade pressures threaten to have an impact on the economy worldwide.
Canada and France also saw that their growth forecasts have declined among higher tariffs, while the United States saw an increase in forecasts. Global growth for this year has also increased from 3 % to 3.2 percent, with many economies more resistant to increased tariffs.
The IMF said growth has surpassed expectations earlier in the year, while some countries have benefited from US tariffs that were less afraid than they were afraid when announcing them. “Households and jobs have taken their consumption and investment in predicting higher tariffs,” the report said. “This led to a temporary increase in global activity in early 2025.”
“Britain is doing the right thing in terms of growth in terms of growth,” said Pierre-Gorinkas, the main economist of the IMF. [in the UK] In 2024 it was 2.5 percent and now it is 3.4 percent, so it seems to move in the wrong direction.
“But a number of factors in this case are what we see as temporary factors, such as the increase in what we call regulated prices, transportation prices, water prices and some decreases in some basket components, such as energy prices, is a kind of movement from the window by which we calculate the inflation rate.”
However, the Chancellor of the Shadow of Tory, Sir Mel Streide, said: “The IMF’s evaluation makes it unpleasant to read. Inflation in England is now the highest in the G7 this year and the highest in the G7 – because of Rachel Reeves’s choice faster than expected.
“Since tenure, the labor force allows life to increase, the debt to the balloon and the confidence of the business to fall down. Taxes are on the rise and are compressed on all sides,” he said.
But Ms. Reeves obtained improved growth estimates to inject optimism. “This is the second continuation of this year’s forecast of growth from the International Monetary Fund. It is not surprising that Britain had G7 growth in the first half of this year, and the average disposable income has increased since the election 800 pounds,” he said.
“But know that this is just the beginning. For many people, our economy is feeling stuck. People feel every day, experts are talking about it, and I want to deal with it. We work together, we can provide a British for everyone.”
