IMF upgrades UK economic growth forecast – but issues tariffs warning
The UK economy will grow more than previously thought, according to the International Monetary Fund (IMF), which has upgraded its latest forecast.
But it warned trade tensions linked to US tariff plans will reduce UK economic growth next year.
The Washington-based UN financial agency said the UK economy will expand 1.2% this year and “gain momentum next year”.
The upgrade in forecasts, however, is slight, up from an expected 1.1% announced in April as the world reeled from the global trade war sparked by US President Donald Trump’s tariffs.
That April figure was a 0.5% downgrade from the projected 1.6% growth for 2025 the IMF foresaw in January and the 1.5% forecast issued in October.
It means the IMF expects the UK economy to grow less this year than it forecast in October and January.
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Tariffs warnings
This anticipated lower growth is largely due to tariffs – taxes on goods imported to the United States – and the uncertainty caused by shifting trade policy in the US, the world’s largest economy.
While many tariffs have been paused until 8 July, it’s unclear if deals will be in place by then and if pauses may be extended.
The effect of this has been quantified as a 0.3 percentage points lower growth by 2026 in the UK, the IMF said.
The organisation held its prediction that the UK economy will grow by 1.4% in 2026.
“The forecast assumes that global trade tensions lower the level of UK GDP by 0.3% by 2026, due to persistent uncertainty, slower activity in UK trading partners, and the direct impact of remaining US tariffs on the UK,” it said.
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Trump’s tariffs: What you need to know
It comes despite the UK having agreed a deal with the Trump administration to circumvent the 25% tariffs on cars and metals.
The IMF also cautioned that “weak productivity continues to weigh on medium-term growth prospects”.
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Interest rates “should” continue to come down, making borrowing cheaper, though the IMF acknowledged the rate-setters at the Bank of England now have a “more complex” job due to the recent rise in inflation and “fragile” growth.
The author of the report on the UK Luc Eyraud said the IMF expected the Bank to cut interest rates by 0.25 percentage points every three months until they reach a level of around 3%, down from the current 4.25%.
Praise was given to the UK government as the IMF said “fiscal plans strike a good balance between supporting growth and safeguarding fiscal sustainability”.
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The news is being taken as a win by Chancellor Rachel Reeves.
“The UK was the fastest growing economy in the G7 for the first three months of this year and today the IMF has upgraded our growth forecast,” she said.
“We’re getting results for working people through our plan for change – with three new trade deals protecting jobs, boosting investment and cutting prices, a pay rise for three million workers through the national living wage, and wages beating inflation by £1,000 over the past year.”
The US Labor Department has officially rescinded guidance issued during the Biden administration that limited the inclusion of cryptocurrency in 401(k) retirement plans.
On May 28, the Labor Department revoked a 2022 guidance that had urged fiduciaries to be “extremely cautious” when considering cryptocurrency for 401(k) retirement plans. The move could give asset managers more flexibility to include digital assets in retirement investment options.
The government agency removed the guidance asserting that it represented a departure from the department’s “historically neutral, principled-based approach to fiduciary investment decisions.”
“We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats,” said US Secretary of Labor Lori Chavez-DeRemer.
The Labor Department under Biden criticized the practice of marketing cryptocurrencies to 401(k) participants. At the time, the agency claimed cryptocurrencies posed “significant risks and challenges” to participants’ retirement accounts due to their “speculative and volatile” nature and “valuation concerns,” among other reasons.
The American Banking Association (ABA) criticized the 2022 compliance release, claiming that it did not make the guidance available for public comment and review prior to issuance.
Related: Fidelity introduces retirement accounts with minimal-fee crypto investing
Trump administration shifts crypto landscape
President Trump has pledged to make the United States “the world capital of crypto” during his 2024 campaign.
Under his administration, the Securities and Exchange Commission has scaled back several enforcement actions and investigations involving Web3 companies such as Uniswap, Coinbase, and Kraken, while also engaging in policy discussions on topics like real-world asset tokenization and the regulatory status of certain tokens.
At the same time, some lawmakers have expressed concerns about Trump’s involvement in the crypto space, including calls for greater scrutiny of his associated ventures.
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Bilal Bin Saqib, head of Pakistan’s crypto council, announced on May 28 that the country is moving to establish a strategic Bitcoin reserve.
Speaking at the Bitcoin 2025 conference in Las Vegas, Nevada, Saqib said the government of Pakistan followed the United States’ lead in establishing a Bitcoin strategic reserve and is embracing pro-crypto regulatory policies. The government official told the audience:
“Today is a very historic day. Today, I announce the Pakistani government is setting up its own government-led Bitcoin Strategic Reserve, and we want to thank the United States of America again because we were inspired by them.”
The announcement represents a significant departure from the government of Pakistan’s previous stance on cryptocurrencies, holding that crypto would never be legal in the country.
Pakistan’s shift reflects the broader trend of nation-states adopting pro-crypto policies following the regulatory shift in Washington, DC under the President Donald Trump administration.
Related: Pakistan appoints special assistant to PM on blockchain and crypto
United States Vice President JD Vance took the stage to deliver a keynote address at the Bitcoin 2025 conference in Las Vegas, Nevada, encouraging Bitcoiners to deepen their involvement in politics.
Vance highlighted the strategic and geopolitical importance of Bitcoin, emphasizing that the US should maintain leadership in the crypto industry to remain competitive in the age of digital finance. Vance told the audience:
“What happens in the world of politics, what happens in the world of bureaucracy, will affect even the most transformational and valuable technologies if we do not make the right decisions. The first thing that I would ask you, is to take the momentum of your political involvement in 2024 and carry it forward to 2026 and beyond.”
“Don’t ignore politics because I guarantee you, my friends, politics is not going to ignore this community, not now, and not in the future,” the vice president continued.
Bitcoin continues to gain institutional legitimacy and has been elevated to an asset class with macroeconomic and geopolitical importance. Market analysts and Bitcoin advocates warn that the global race to acquire BTC is underway between sovereign powers.
Related: Crypto czar Sacks says US could possibly ‘acquire more Bitcoin’
Nation-state Bitcoin adoption
Bitcoin maximalists and market analysts argue that high-stakes game theory compels nation-states to adopt BTC due to the downside or opportunity cost of not adopting the scarce digital asset as sovereign competitors do.
This alleged nation-state’s fear of missing out (FOMO) was amplified by US President Donald Trump’s pro-crypto stance, including the creation of a Bitcoin strategic reserve and a crypto advisory council.
The regulatory shift in the United States prompted other governments to indicate a possible policy reset on cryptocurrencies and Bitcoin.
The government of India, for instance, is reconsidering its crypto policies in response to regulatory changes in the US. India’s economic affairs secretary, Ajay Seth, said that digital assets do not care about borders.
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