IMF raises UK growth forecast, citing investment linked to AI

In short: The IMF has upgraded its forecast for UK economic growth, and it said investment and exports linked to AI are a key reason.

What happened

The International Monetary Fund, or IMF (a global organisation that tracks and advises on economies), raised its outlook for the UK in its latest World Economic Outlook report. It now expects the UK economy to grow by 1.3% in 2026. That is 0.5 percentage points higher than the IMF forecast in April.

The IMF said the UK appears to be benefiting from the current tech boom, with growth supported by AI-related investment and exports. AI, or artificial intelligence, is software that can do tasks that normally need human judgment, like writing, sorting information, or spotting patterns (think of it as a very fast assistant that works with data). The IMF said Germany is the only other G7 country whose outlook improved as much since April, helped by global demand for AI-related products.

The upgrade also reflects recent UK data showing the economy grew 0.5% in the second quarter of 2026, after 0.6% growth in the first quarter. Economists told the Financial Times that business investment has picked up, especially in software, hardware, data centres (large buildings full of computers), and related infrastructure.

Why it matters

A stronger growth forecast can affect everyday life because it influences jobs, wages, and how much tax money the government collects for public services. But the IMF also warned the UK could face a new burst of inflation as higher energy prices feed through the economy, which can keep interest rates higher for longer and make borrowing, from mortgages to business loans, more expensive.

Source: Financial Times