UK is no longer a laggard on growth and relatively responsible on borrowing, but still struggles to lift living standards 13 October 2026 The latest IMF outlook shows that compared to its G7 peers, the UK is performing relatively well on growth and deficit reduction, but poorly on GDP per capita – the metric that matters most for living standards. Key insights from its World Economic Outlook include: The 0.5ppt upgrade to UK GDP growth this year is the joint-largest in the G7 (along with Germany). The UK has the biggest fall in the government deficit (general government net lending/borrowing) in the G7, with the IMF forecasting a deficit of 1.4% of GDP in 2031. The UK compares less favourably on GDP per capita growth – performing the second-worst in 2026 (ahead of France) and third-worst in 2027 (ahead of France and Italy). In its Budget preview report today, the Foundation warns that conflict in the Middle East has halved the Chancellor’s headroom against his binding fiscal rule to £12 billion. He should respond with a Budget that repairs the damage to our public finances while also providing well-targeted support for lower income families. Simon Pittaway, Principal Economist at the Resolution Foundation, said: “Last spring, a positive economic outlook from the OBR was punctured by conflict in the Middle East. Now in the autumn, another positive economic outlook this time courtesy of the IMF, looks set to be overshadowed by a tough Budget in the coming weeks. “Today’s outlook shows that the UK is far from a laggard when it comes to growth, relatively responsible when it comes to the public finances, but performs poorly when it comes to living standards. “The Chancellor must build on this in a Budget that balances targeted cost of living support while reassuring the markets by getting borrowing down.” Notes to Editors The 0.5ppt growth upgrade is relative to the IMF’s April 2026 World Economic Outlook (WEO). Some of that upgrade had already been made in the IMF’s partial WEO update in July.
