That would make the UK the third fastest-growing economy in the G7 in 2026 \u2013 behind the US, whose 2.3% growth rate has been boosted by the AI investment boom<\/a>; and oil-exporting Canada, at 1.1%.<\/p>\n The modest upgrade is the latest hint that the incoming prime minister, Andy Burnham<\/a>, may inherit an economy less battered by the Middle East conflict than previously feared.<\/p>\n The IMF\u2019s growth forecast for the UK next year is unchanged at 1.3%, as inflation falls back towards the government\u2019s 2% target by the middle of 2027.<\/p>\n Meanwhile, official data showed UK inflation unexpectedly remained unchanged in May<\/a>, with financial markets pricing in just one interest rate rise by next spring.<\/p>\n At the height of the conflict it was feared Bank of England<\/a> policymakers might resort to several successive increases to tackle the impact of soaring prices \u2013 with knock-on effects for consumers and businesses.<\/p>\n Global oil prices have fallen sharply since the announcement of the memorandum of understanding between the US and Iran last month<\/a>. However, prices surged on Wednesday amid fresh uncertainty about the prospects for peace after Donald Trump described the ceasefire as \u201cover\u201d<\/a>.<\/p>\n The IMF\u2019s forecast for global economic growth is broadly unchanged since April, at 3% this year and 3.4% next \u2013 down from an average of 3.5% over the previous two years.<\/p>\n UK GDP comparison with other G7 economies <\/a><\/p>\n It explains that the AI boom<\/a> has helped to cushion the impact of costlier energy resulting from the war \u2013 though some countries have been hit much harder than others.<\/p>\n \u201cThe modest slowdown reflects the effects of the war in the Middle East being partly offset by accelerated demand-driven momentum in the global technology cycle, thanks to advances in artificial intelligence (AI) and its adoption,\u201d it says.<\/p>\n Oil prices have risen less dramatically than some analysts feared, meanwhile, due to the drawdown of emergency stockpiles<\/a>.<\/p>\n The IMF points out that the price of fossil fuels for consumers has varied significantly, according to a wide range of factors, including geographical location.<\/p>\n Retail gasoline prices have risen by 30% in Asia, for example, but only 15% in Latin America, while liquefied natural gas prices are up 50% in Asia and 25% in Europe.<\/p>\n skip past newsletter promotion<\/a>Free newsletter | Every weekday<\/p>\n Sign up to Business Today<\/p>\n Get set for the working day \u2013 we’ll point you to all the business news and analysis you need every morning<\/p>\n after newsletter promotion<\/p>\n The countries whose economies have been worst hit are those that are energy importers, but have played little part in global technology supply chains.<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/06\/500.jpg\")
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