Closing post
Time to wrap up….
The IMF has upgraded its forecast for the UK economy this year after strong growth in recent months. The Fund now forecasts UK GDP will increase by 1.2% this year, up from a forecast of 1.1% last month.
Following its annual assessment of the UK, the IMF says:
An economic recovery is underway. Growth is projected at 1.2 percent in 2025 and will gain momentum next year, although weak productivity continues to weigh on medium-term growth prospects.
The authorities’ fiscal plans strike a good balance between supporting growth and safeguarding fiscal sustainability. It will be important to stay the course and deliver the planned deficit reduction over the next five years to stabilize net debt and reduce vulnerability to gilt market pressures. Further refinements of the fiscal framework could help minimize the frequency of fiscal policy changes. In the longer term, the UK will face difficult choices to align spending with available resources, given ageing-related expenditure pressures.
The IMF also recommended that Rachel Reeves should refine her fiscal rules to prevent the need for emergency spending cuts. This would help the chancellor avoid making short-term savings when there is a downturn in economic forecasts.
Stock markets in the UK and the US have rallied, as trading resumes after a long weekend on both sides of the Atlantic.
Share prices jumped on relief that Donald Trump has delayed planned 50% tariffs on European goods until July, sending the FTSE 100 to its highest since early March. Germany’s DAX hit a record high.
The US president has posted today that the EU has “called to quickly establish meeting dates”.
In other news:
Africa’s growth forecast for the year have been cut, due to tariff uncertainty
UK retailers are gloomier about business prospects, after reporting a drop in sales
Sales of Tesla cars across Europe have fallen sharply again, down around 50% in April.
US companies vulnerable to a trade war are among the top risers on Wall Street today.
Nike (which makes almost all its products in Asia) are up 3%, as are chipmaker Nvidia.
