That upgrade should cheer ministers, even though it\u2019s still below the 1.3% growth which the IMF predicted in January before the Iran war began, and would be a slowdown compared with 2025 when the UK grew by 1.4%.<\/p>\n
The improved forecast comes after the IMF concluded its annual assessment of the UK economy (known as an Article IV Mission).<\/p>\n
The IMF says:<\/p>\n
double quotation markWhile the UK economy has remained resilient in recent years, the war in the Middle East is dampening near-term prospects.<\/p>\n
Growth is projected to slow to 1.0 percent this year, then gradually recover as the shock dissipates. Higher energy prices are expected to push inflation up temporarily and delay the return to the central bank\u2019s target by about one year.<\/p>\n
Share<\/a><\/p>\n Updated at\u00a007.02 EDT<\/p>\n Key events<\/p>\n Show key events only<\/p>\n Please turn on JavaScript to use this feature<\/p>\n Bond meltdown eases as oil drops<\/p>\n The early selloff in government bonds has now eased, thanks to a drop in the oil price.<\/p>\n The yields (interest rates) on UK long-dated bonds have dropped further from Friday\u2019s multi-year highs, while US borrowing costs are also slightly lower.<\/p>\n UK 30-year bond yields are now down almost nine basis points at 5.76%, away from the 28-year high of 5.85% set last Friday.<\/p>\n That follows a drop in the oil price, following a report that the US has proposed a temporary waiver of sanctions on Iran\u2019s oil to agree to a peace deal and reopen the strait of Hormuz.<\/p>\n Share<\/a>IMF: Pensions triple lock may need to go<\/p>\n Britain may need to ditch the pensions triple lock, or bring in more NHS charges, the International Monetary Fund has warned.<\/p>\n In the Concluding Statement of the 2026 Article IV Mission to the UK, the IMF warns that \u2018difficult choices\u2019 will be needed to cope with rising pressures from ageing, defense, and the climate transition.<\/p>\n The long-term scope for further tax rises is \u2018becoming limited\u2019, the IMF suggests, meaning spending reforms will be needed.<\/p>\n It says:<\/p>\n double quotation markDeeper expenditure reforms could, for example, entail replacing the triple lock with a policy of indexing the state pension to the cost of living, improving the targeting of social benefits, as well as focusing more on preventative care, and expanding charges in the health system while protecting the vulnerable.<\/p>\n [The triple lock means pensions rise each year in line with wages, inflation, or by 2.5%, whichever is higher].<\/p>\n Share<\/a>Hacks beat FlaksA photo of the Hacks vs Flaks charity football game Photograph: Sky Blue Photography<\/p>\n It\u2019s the business end of the football season, and few games are as closely fought as the annual Hacks v Flaks charity game.<\/p>\n We\u2019re pleased to report that the cream of UK financial journalism beat their counterparts in the communications industry in what\u2019s been described as a physical battle at Plough Lane, home of AFC Wimbledon, on Friday night.<\/p>\n The game finished 3-1 to the Hacks, including Richard Partington<\/a> of this parish<\/a>.<\/p>\n The Hack\u2019s goal-scoring stars were the Financial Times\u2019 Ramsay Hodgson with two, and freelancer Lee Stobbs with a late \u201cbreakaway goal at the death\u201d, while FTI Consulting\u2019s Mathias Davies got the Flaks onto the scoresheet.<\/p>\n [FTI also claim they were denied a \u201cstonewall\u201d penalty, but VAR hasn\u2019t yet reached these heights, so we\u2019ll have to file that under \u2018according to sources\u2019\u2026].<\/p>\n More importantly, the match also raised over \u00a37,500 which AFC Wimbledon Foundation will use to run activities for young people (often those on free school meals), and the elderly in South-West London.<\/p>\n Share<\/a><\/p>\n Updated at\u00a009.44 EDT<\/p>\n London tube strikes called off at last minute<\/p>\n Planned strikes by drivers on the London Underground<\/a> this week have been called off.<\/p>\n The RMT union has announced that the two 24-hour stoppages from midday on Tuesday, which were set to disrupt travel over four days this week, had been suspended.<\/p>\n Share<\/a><\/p>\n Andy Burnham is giving a speech now, in which he explains that \u201c40 years of neoliberalism that have not been kind to the north of England\u201d \u2013 starting with the deindustrialisation of the 1980s, followed by privatisations in the 90s and austerity in the 2010s.<\/p>\n My colleague Andrew Sparrow<\/a>\u2019s Politics Live blog has all the details:<\/p>\n Share<\/a><\/p>\n The IMF\u2019s UK growth upgrade is welcome, but won\u2019t make a meaningful difference, argues George Lagarias, chief economist at Forvis Mazars:<\/p>\n double quotation mark\u201cIt\u2019s a (very) welcome respite for the UK economy, presently beset by domestic uncertainty, rising borrowing costs, a global trade war and a seemingly interminable tumult in the Middle East.<\/p>\n The IMF upgraded GDP growth prospects for 2026, from 0.8% to 1%, citing economic resilience and better-than-expected growth earlier in the year. With that said, the upgrade is mostly a backward-looking one, and would probably contribute little to changing monetary policy or improving borrowing costs.<\/p>\n The Fund cites significant challenges to growth and inflation if the Hormuz Strait remains closed for much longer.\u201d<\/p>\n Share<\/a>Petrol pump price closing in on April\u2019s three-and-a-half-year high<\/p>\n Motorist groups are warning that UK fuel prices will soon rise over the highs set early in the Iran war.<\/p>\n The AA confirm that petrol pump prices are closing in on April\u2019s three-and-a-half-year high, which they predict could be hit within days as the bank holiday weekend approaches.<\/p>\n The RAC has predicted that later this week the average price of a litre of petrol will eclipse the peak on 15 April, which was the last day prices peaked since the war in Iran began.<\/p>\n According to the RAC, the average price of a litre of petrol has risen to 158.24 today, only slightly below the 158.31p recorded on 15 April.<\/p>\n A chart showing UK petrol and diesel prices Photograph: RAC<\/p>\n Luke Bosdet, the AA\u2019s spokesman on pump prices, says:<\/p>\n double quotation mark\u201cThe need for ditching or delaying the fuel duty increase, due from September onwards, has been made more critical by average UK petrol pump prices climbing to within 1p of the three-and-a-half-year high, set in April.\u201d<\/p>\n Yesterday, the Sun on Sunday reported that Rachel Reeves is expected this week to announced that the 5p increase in fuel duty that was due to take effect in the autumn will not now go ahead.<\/p>\n Downing Street have declined to comment on \u2018tax speculation\u2019, but didn\u2019t deny the story, our Politics Live blog reports.<\/p>\n Share<\/a>UK moves towards looser bank ringfence The Treasury has fired the starting gun on loosening ringfencing rules for UK banks, but it\u2019s still a relatively long road ahead, with consultations due to launch this summer and formal changes to legislation due…\u201cas soon as parliamentary time allows.\u201d<\/p>\n While the changes are due to be pretty technical, the Treasury said in its review released on Monday that proposed reforms would see banks \u201cuse a limited portion of their balance sheets more flexibly\u201d, IE sharing resources across their ringfenced bank and the rest of their operations, and give the Bank of England more flexibility to update and tailor the rules over time.<\/p>\n The \u00a335bn ceiling, at which banks have to ringfence their retail operations, will for example, be reviewed every three years, with a view to uprating it in line with the evolution of banking practices and growth in the deposit base.\u201d<\/p>\n HMT says that the proposed reforms will help by \u201cpotentially unlocking up to \u00a380bn of additional financing for UK businesses\u201d.<\/p>\n Ringfencing was introduced after the 2008 financial crisis, in order to protect consumer cash from a bank\u2019s riskier business activities in the coming months. Most of the big banks have lobbied relentlessly for rules to be rowed back, though Barclays has been the one stronghold for maintaining current rules, having invested heavily in their implementation.<\/p>\n Chancellor Rachel Reeves first confirmed that the government would be looking at ringfencing reforms nearly a year ago in July 2025, as part of her Mansion House speech in which she declared that rules and red tape were a\u201dboot on the neck\u201d of business and risked \u201cchoking off\u201d innovation.<\/p>\n Things had gone quiet since, but banks were heartened last week to hear in the Kings Speech that the so-called Enhancing Financial Services Bill – which was expected to include the ringfencing changes – was due to be put through parliament.<\/p>\n The launch date of the consultation is currently TBC\u2026<\/p>\n Share<\/a><\/p>\n Updated at\u00a008.30 EDT<\/p>\n Full story: IMF urges UK to \u2018stay the course\u2019 on borrowingShare<\/a><\/p>\n A \u2018family picture\u2019 of G7 finance ministers meeting in Paris has arrived:<\/p>\n (L-R) Eurogroup’s president Kyriakos Pierrakakis, Vice-chancellor of Germany Lars Klingbeil, US secretary of the Treasury Scott Bessent, France’s economy, finances and industry minister Roland Lescure, Britain’s chancellor of the exchequer Rachel Reeves, Canada’s minister of finance Fran\u00e7ois-Philippe Champagne, Japan’s minister of finance Satsuki Katayama, Italy’s minister of economy and finance Giancarlo Giorgetti, and EU commissioner for economy and productivity Valdis Dombrovskis. Photograph: Christophe Petit-Tesson\/EPAShare<\/a><\/p>\n The IMF is also recommending the Bank of England should leave interest rates on hold this year.<\/p>\n It says:<\/p>\n double quotation markMonetary policy should remain restrictive to ensure that higher energy prices do not spill over to core inflation and wage growth. The rise in energy prices will lift headline inflation this year while also weighing on output, complicating policy calibration.<\/p>\n Staff assesses that holding the policy rate unchanged for the remainder of the year would maintain a sufficiently restrictive monetary stance to limit second-round effects and keep long-term inflation expectations anchored.<\/p>\n However, given the \u201cexceptional uncertainty\u201d, the BoE should retain the flexibility to either tighten or loosen monetary stance, and \u201cbe prepared to respond forcefully\u201d if needed to cool inflationary pressures.<\/p>\n Share<\/a>IMF: UK should ‘stay the course’ on deficit reduction<\/p>\n The International Monetary Fund is also urging the UK government to stick with its deficit reduction plans.<\/p>\n In the concluding statement following its Article IV healthcheck on the UK, the fund had warm words for the plans being executed by chancellor Rachel Reeves (and her fiscal rules<\/a>), saying:<\/p>\n double quotation markThe authorities\u2019 medium-term fiscal strategy continues to strike a good balance between deficit reduction and growth-friendly spending, and recent changes to the fiscal framework strengthen policy stability and credibility.<\/p>\n Staying the course on deficit reduction will be important given market pressures and elevated implementation risks.<\/p>\n This vote of confidence from the IMF comes as various groups within the Labour party draw up competing economic plans and ideas that might revive the party\u2019s fortunes:<\/p>\n Share<\/a>IMF raises UK growth forecast for 2026<\/p>\n Newsflash: The International Monetary Fund has raised its forecast for UK growth this year.<\/p>\n IMF economists now expect UK GDP to rise by 1.0% in 2026, up from the 0.8% it forecast in April, due to the economy\u2019s \u201cstrong pre-war momentum\u201d and a \u201crobust\u201d performance in the first quarter of this year when the economy grew by 0.6%<\/a>.<\/p>\n That upgrade should cheer ministers, even though it\u2019s still below the 1.3% growth which the IMF predicted in January before the Iran war began, and would be a slowdown compared with 2025 when the UK grew by 1.4%.<\/p>\n The improved forecast comes after the IMF concluded its annual assessment of the UK economy (known as an Article IV Mission).<\/p>\n The IMF says:<\/p>\n double quotation markWhile the UK economy has remained resilient in recent years, the war in the Middle East is dampening near-term prospects.<\/p>\n Growth is projected to slow to 1.0 percent this year, then gradually recover as the shock dissipates. Higher energy prices are expected to push inflation up temporarily and delay the return to the central bank\u2019s target by about one year.<\/p>\n Share<\/a><\/p>\n Updated at\u00a007.02 EDT<\/p>\n Speaking of oil\u2026.Ryanair has said it is \u201cconfident\u201d it will not face a jet fuel shortage<\/a> this summer amid fears over widespread cancellations<\/a> linked to the Iran war.<\/p>\n Neil Sorahan, the chief financial officer at the budget airline, said he was \u201cincreasingly confident that we will not see any supply shocks this summer\u201d.<\/p>\n The airline said fares had fallen in recent weeks due to uncertainty around conflict in the Middle East<\/a>, with prices expected to fall by a \u201cmid-single digit percentage\u201d in the three months ended in June.<\/p>\n Share<\/a>IEA’s Birol warns commercial oil inventories are falling rapidlyInternational Energy Agency (IEA) executive director Fatih Birol (right) speaking with Organization for Economic Cooperation and Development (OECD) secretary-general Mathias Cormann at the G7 finance ministers’ and central bank governors’ meeting in Paris Photograph: Tom Nicholson\/Reuters<\/p>\n International Energy Agency executive Director Fatih Birol has issued a new warning that oil inventories are shrinking fast.<\/p>\n Speaking to reporters on the sidelines of the G7 finance ministers\u2019 meeting in Paris, Birol flagged that the tally of commercial oil inventories is shrinking at an accelerated pace.<\/p>\n Bloomberg has the details:<\/p>\n double quotation mark\u201cI think it is depleting very fast,\u201d he told reporters at the sidelines of a meeting of Group of Seven finance ministers in Paris, echoing comments from last week. It will be \u201cseveral weeks, but we should be aware of the fact that it is declining rapidly,\u201d he said.<\/p>\n He also highlighted that the spike in fertilizer and diesel prices comes at the start of the travel and planting season.<\/p>\n Share<\/a><\/p>\n Updated at\u00a006.13 EDT<\/p>\n UK 10-year yields ease back<\/p>\n After hitting their hitting their highest levels since 2008 this morning, UK 10-year borrowing costs have eased back too.<\/p>\n The yield, or interest rate, on 10-year gilts is down 2.5 basis points (0.025 of a percentage point) to 5.14%.<\/p>\n That follows the easing in the oil price, after Tehran said it had responded to a new US proposal aimed at ending the Iran war (see earlier post<\/a>).<\/p>\n It also follows early losses in global bonds, with Japan\u2019s long-term borrowing costs hitting record highs (see opening post<\/a>).<\/p>\n Share<\/a><\/p>\n Dominic Caddick, economist at the New Economics<\/a> Foundation (NEF), argues that borrowing costs will stay high regardless of who leads the Labour party.<\/p>\n double quotation mark\u201cBorrowing costs will stay high regardless of who takes over the Labour Party – the real drivers are Trump\u2019s Iran policy, UK inflation exposure, and pension market shifts that no austerity candidate can fix. Ending Britain\u2019s bond market crisis requires direct intervention on inflation and better coordination between the Treasury and the Bank of England so that borrowing costs come down.<\/p>\n \u201cMeanwhile, government must urgently address Britain\u2019s weak demand to boost the economy. Through an essential energy guarantee government can help address inflation and deficient demand at once. A clear, credible economic strategy will bring borrowing costs down, and can be funded through progressive tax levers.\u201d<\/p>\n [\u2018Pension market shifts\u2019 refers to the shrinking market for defined benefit pensions, which had been a major purchases of long-term gilts such as 30-year bonds in the past]<\/p>\n![\"Kalyeena](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/05\/1779116360_583_Kalyeena_Makortoff,_L.png\")
Kalyeena Makortoff<\/p>\n