London Daily

Focus on the big picture.
Saturday, Sep 13, 2025

IMF warns rising prices will be worse in UK

IMF warns rising prices will be worse in UK

The International Monetary Fund (IMF) has doubled down on criticism of the chancellor's mini-budget, days after warning it will fuel rising prices.

The body, which works to stabilise economic growth, admitted tax cuts announced by Kwasi Kwarteng would boost growth in the short-term.

But it said the cuts would "complicate the fight" against soaring prices.

It expects high prices to last longer in the UK with only Slovakia out of the eurozone set to see higher inflation.

Inflation, which measures how the cost of living changes over time, is expected to peak at about 11.3% before the end of the year in the UK, according to the IMF's latest assessment of the global economy.

In each of the next two years, it expects price rises will average at about 9% - far above the Bank of England's target of 2%.

Although the UK economy is set to grow the fastest of the major economies included in the G7 group this year, it is projected to grind to a near-halt next year, with it expanding by just 0.3%.

The most recent figures included in the report by the influential financial institution do not fully, however, take into account the UK chancellor's recent mini-budget.


'Steady hand'


After Mr Kwarteng unveiled plans for huge tax cuts in the UK, the IMF criticised the plans warning they were likely to increase inequality and add to pressures pushing up prices.

It was an unusually outspoken statement from the IMF, which has a key role in acting as an early economic warning system.

The IMF said it understood the government's mini-budget aimed to boost growth, but it said that the tax cuts could speed up the pace of price rises, which the UK's central bank, the Bank of England, is trying to bring down.

Downing Street defended the chancellor's plans, with the Prime Minister's official spokesperson saying its policies aimed "to support British people at a time of global high prices" and said the IMF report showed "the global challenges that countries are facing".


The IMF warned the global economy was facing a downturn with "the worst yet to come" as war in Ukraine helps push prices higher around the globe.

"For many people 2023 will feel like a recession," it warned.

It said governments and central banks globally had to work together to help people through the turmoil.

The IMF's Pierre-Olivier Gourinchas told the BBC: "Imagine a car with two drivers at the front and each of them has a steering wheel - and one wants to go left and the other wants to go right."

He added: "One is the central bank trying to cool off the economy so that price pressures will ease, and the other one wants to spend more to support families... it's probably not going to work very well."

In the UK, the chancellor has already said he will bring forward his economic plan where he will spell out how he plans to pay for the tax cuts and provide an independent forecast on the UK economy's prospects, a move welcomed by the IMF.

However on Tuesday, government borrowing costs remained close to the levels seen at the height of the market turmoil last month despite fresh action from the Bank of England to try and stabilise financial markets.

The IMF also cautioned that governments would need to protect the least well-off from the impact of higher prices.

Poorer households often spend relatively more than others on food, heating, and fuel, it pointed out - all areas that have seen steep price rises as energy and grain exports have been restricted after the invasion of Ukraine.

And countries that are reliable on Russian gas in Europe are being hit particularly badly. Germany's economy, for example, is now predicted to contract next year.


Meanwhile, Russia's economy is expected to contract by 2.3% next year, the biggest fall of all the nations included in the projections.

Speaking on Monday, IMF boss Kristalina Georgieva noted that growth was also being dragged down in China by continued Covid restrictions, while in the US rising interest rates were "starting to bite".

At the first in-person meetings between the IMF and the World Bank since the pandemic, she said countries could "reduce the pain ahead of us in 2023" by acting together.

She added that the IMF will be pushing for major economies to carry on with their efforts to bring down the cost of living, even if they have a negative impact on economic growth.

If they don't do enough, she said, "we are in trouble. We cannot afford inflation to be a runaway train."

Newsletter

Related Articles

0:00
0:00
Close
French Debt Downgrade Piles Pressure on Macron’s New Prime Minister
US and UK Near Tech, Nuclear and Whisky Deals Ahead of Trump Trip
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
Anesthesiologist Left Operation Mid-Surgery to Have Sex with Nurse
Tens of Thousands of Young Chinese Get Up Every Morning and Go to Work Where They Do Nothing
The New Life of Novak Djokovic
The German Owner of Politico Mathias Döpfner Eyes Further U.S. Media Expansion After Axel Springer Restructuring
Suspect Arrested: Utah Man in Custody for Charlie Kirk’s Fatal Shooting
In a politically motivated trial: Bolsonaro Sentenced to 27 Years for Plotting Coup After 2022 Defeat
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Turkish authorities seize leading broadcaster amid fraud and tax investigation
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
ChatGPT CEO signals policy to alert authorities over suicidal youth after teen’s death
The British legal mafia hit back: Banksy mural of judge beating protester is scrubbed from London court
Surpassing Musk: Larry Ellison becomes the richest man in the world
Embarrassment for Starmer: He fired the ambassador photographed on Epstein’s 'pedophile island'
Manhunt after 'skilled sniper' shot Charlie Kirk. Footage: Suspect running on rooftop during panic
Effective Protest Results: Nepal’s Prime Minister Resigns as Youth-Led Unrest Shakes the Nation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
King Charles and Prince Harry Share First In-Person Moment in 19 Months
Starmer Establishes Economic ‘Budget Board’ to Centralise Policy and Rebuild Business Trust
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Brazilian police say ex-President Bolsonaro had planned to flee to Argentina seeking asylum
Trinidad Leader Applauds U.S. Naval Strike and Advocates Forceful Action Against Traffickers
Kim Jong Un Oversees Final Test of New High-Thrust Solid-Fuel Rocket Engine
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Supreme Court temporarily allows Trump to pause billions in foreign aid
Charlie Sheen says his father, Martin Sheen, turned him in to the police: 'The greatest betrayal possible'
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
Pig Heads Left Outside Multiple Paris Mosques in Outrage-Inducing Acts
Nvidia’s ‘Wow’ Factor Is Fading. The AI chip giant used to beat Wall Street expectations for earnings by a substantial margin. That trajectory is coming down to earth.
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
On the Anniversary of Queen Elizabeth’s Death: Prince Harry Returns to Britain
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Murdoch Family Finalises $3.3 Billion Succession Pact, Ensuring Eldest Son’s Leadership
Big Oil Slashes Jobs and Investments Amid Prolonged Low Crude Prices
Court Staff Cover Up Banksy Image of Judge Beating a Protester
Social Media Access Curtailed in Turkey After CHP Calls for Rallies Following Police Blockade of Istanbul Headquarters
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
Elon Musk Poised to Become First Trillionaire Under Ambitious Tesla Pay Plan
France, at an Impasse, Heads Toward Another Government Collapse
Burning the Minister’s House Helped Protesters to Win Justice: Prabowo Fires Finance Minister in Wake of Indonesia Protests
Brazil Braces for Fallout from Bolsonaro Trial by corrupted judge
The Country That Got Too Rich? Public Spending Dominates Norway Election
Nearly 40 Years Later: Nike Changes the Legendary Slogan Just Do It
×