United Kingdom: 2026 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for United Kingdom

International Monetary Fund

No 2026/172, IMF Staff Country Reports from International Monetary Fund

Abstract: The 2026 Article IV Consultation highlights that the UK economy has remained resilient in recent years, but the war in the Middle East has dampened prospects. Growth will slow down markedly this year, then gradually recover as the shock dissipates. Inflation will rise temporarily,delaying the return to target. Risks are tilted to the downside, notably from a prolonged increase in energy prices and sustained market volatility. The crisis underscores the importance of staying the course and providing policy stability to anchor confidence and support investment. Monetary policy should remain sufficiently restrictive to ensure second-round effects from higher energy prices are contained and do not entrench inflation. In the short term, support to households in response to the energy crisis should remain tightly targeted, temporary, and financed through offsetting measures to preserve the consolidation path. In the medium term, the fiscal strategy appropriately aims to stabilize debt while protecting essential spending and supporting investment.

Keywords: article IV; exchange restriction; Fund relation; IMF's article; consultation cycle; Labor markets; Inflation; Energy prices; Financial sector stability; Middle East; Global (search for similar items in EconPapers)
Pages: 102
Date: 2026-07-16
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