The International Monetary Fund (IMF) has upgraded its forecast for the UK economy, predicting stronger growth than previously anticipated. The IMF now expects the UK’s GDP to rise by 1.1% in 2024, up from the 0.7% projected just three months ago. This upward revision signals renewed optimism for the UK’s economic prospects, driven by stronger-than-expected consumer spending and improving business confidence. The IMF further predicts that the economy will accelerate in 2025, forecasting growth of 1.5%.
Economic Acceleration Amid Global Uncertainty
While the UK’s growth forecast has been revised upward, the global economic outlook remains mixed. The US is expected to lead the G7 nations, with its economy projected to grow by 2.8% in 2024 and 2.2% in 2025. Meanwhile, the IMF has also addressed concerns about inflation, predicting an average inflation rate of 2.6% in the UK for 2024, which is expected to fall to 2.1% by 2025.
Chancellor Rachel Reeves welcomed the IMF’s upgraded forecast, noting: “It’s welcome that the IMF has upgraded our growth forecast for this year, but I know there is more work to do. That is why the Budget next week will be about fixing the foundations to deliver change.” Reeves emphasised the need for further measures to bolster growth and ensure long-term stability in the face of ongoing challenges.
What Does This Mean for UK Businesses?
The IMF’s forecast signals positive momentum for the UK economy, but businesses should remain cautious. While growth prospects have improved, inflation and interest rates continue to be key factors that will affect business operations and investment decisions. Higher borrowing costs may still pose a challenge, particularly for small and medium-sized enterprises (SMEs), which may find it harder to access affordable finance.
For UK businesses, the improved outlook offers a glimmer of hope after a prolonged period of uncertainty driven by post-pandemic recovery, inflationary pressures, and geopolitical disruptions. However, it remains crucial for business owners to continue planning carefully, ensuring they are well-positioned to capitalise on the improving economic conditions.
How Beavis Morgan Can Support Your Business
As the UK economy gears up for acceleration, now is the time for businesses to assess their growth strategies and financial health. At Beavis Morgan, we offer a range of services designed to help SMEs and owner-managed businesses navigate economic changes and maximise opportunities for growth.
- Business Advisory Services: Our team provides expert advice on business strategy, helping you optimise your operations and improve profitability in line with the evolving economic landscape.
- Tax Planning: With inflation and interest rates affecting cash flow, effective tax planning is more important than ever. We’ll help you structure your finances to minimise your tax liabilities and make the most of available reliefs.
- Growth Funding: If you’re looking to expand, our partner company, Moorfields Commercial Finance can assist with securing funding, identifying the right opportunities to grow your business while managing financial risks.
- Restructuring and Advisory: As the economy strengthens, some businesses may look to restructure to take advantage of growth opportunities. Beavis Morgan group company, Moorfields Advisory, offers bespoke restructuring advice to ensure your business is in the best shape to succeed.
Planning for the Future
With the IMF forecasting accelerated growth for the UK in 2024 and beyond, businesses should be preparing for potential changes in market conditions, interest rates, and consumer demand. The upcoming Chancellor’s Budget may also bring about fiscal changes that could impact businesses, particularly around tax and investment incentives.
At Beavis Morgan, we stay ahead of these developments to ensure our clients are always equipped to handle new challenges. Contact your usual Beavis Morgan partneror email info@beavismorgan.com to discuss how we can help you prepare for the future and thrive in an improving economic environment.