Three things we've learnt about the UK economy from the IMF

Countries around the world have had their future economic prospects assessed by influential body, the International Monetary Fund (IMF).

What the IMF says matters - it aims to keep the global economy stable and its twice-yearly forecasts are one of the most authoritative looks at what is really going on around the world.

Yet like all forecasts they can also turn out to be incorrect, so they shouldn't be treated as gospel.

Here are three things we've learnt about the UK from the IMF's latest report.

The global economy has been rocked by the US-Israel war with Iran.

The transportation and production of energy in the Middle East has been severely disrupted, causing oil prices to jump and inflation to rise.

To calm the rate of price rises, central banks, including the Bank of England, are expected to hike interest rates in the coming months.

Despite all this, the IMF said the global economy is doing much better than expected, partly because of the surge of investment into artificial intelligence (AI).

And this is good news for the UK. The IMF said its economy would expand by 1.3% in 2026, up from the 1% it predicted in July, before slowing in 2027.

A growing economy means companies are investing more and hiring more people while shoppers have more money to spend. A shrinking economy means the reverse is true.

There is increased concern about how much money countries are borrowing, but the IMF said the UK is doing better than all other major economies at this.

The IMF said the UK "basically stands out, along with India" when it comes to addressing the problem and by 2031 it is projected to have the lowest annual borrowing of the G7 group of countries, which includes Canada, France, Germany, Italy, Japan and the US.

Sir Howard Davies, former deputy governor of the Bank of England, said this was largely because the UK has a government with a majority which has committed to tackling the situation, which it is expected to achieve either through tax rises, cuts to public services, or a mix of both.

By contrast, he says the US has said little about reducing its deficit, while France and Germany don't have majority governments.

"So, we [the UK] are not great students, but we look somewhat better than some of the others we are sharing the class with," he said.

Meanwhile, the IMF's growth forecasts for the UK mean it is expected to have the second-fastest growing economy in the G7 this year along with Germany.

Sir Howard believes this should also be seen in context.

"We're still growing slowly. It's almost like saying we're winning a slow bicycle race here because other people are going backwards a bit more rapidly than we are."