The International Monetary Fund raised its 2026 UK growth forecast to 1.3%. It also warned that inflation will run hotter than it expected.
1.2% growth expected in 2027, down from 1.3% forecast earlier.
3.3% inflation expected this year, up from 3.2% previously forecast.
2.8% inflation forecast for 2027, up from 2.4% previously.
5.3% unemployment expected this year, below the 5.6% earlier predicted.
Why it matters: The IMF links higher prices to energy and food disruption from the US-Iran war. It says higher energy costs and interest rates will slow growth in 2027.
The Bank of England expects inflation slightly above 4% in early 2027.
The Institute for Fiscal Studies says inflation will squeeze departmental budgets before the Budget.
Economists estimate Healey must find £35bn to avoid spending cuts.
What’s next: Healey presents Prime Minister Andy Burnham's government's tax and spending plans on Oct. 28. He said the Budget would aim to "provide some breathing space" for households.
Conservative shadow chancellor Andrew Griffith warned that tax rises would mean slower growth.
The Resolution Foundation urged targeted cost-of-living support this winter.
How long will the Middle East conflict keep energy and food prices high?
Will Healey's Budget rely on tax rises, spending cuts or more borrowing?
Will the Bank of England raise interest rates if inflation tops 4%?
