The latest global economic assessment presents a tale of two Britains. One, described by the UK’s Chancellor, is a G7 growth leader with rising disposable incomes. The other, detailed in the report itself, is a nation facing a looming inflation crisis, with price rises set to be the highest among its peers.
The Chancellor celebrated the modest upgrade to the UK’s 2025 growth forecast, now at 1.3%, as proof of the country’s strong economic management. The report confirms the UK is the second fastest-growing G7 economy this year, providing ammunition for this optimistic narrative.
However, the report’s fine print tells a much darker story. It projects UK inflation will average 3.4% in 2026, the highest in the G7, and remain at the top in 2027. The chief economist for the report expressed concern that British households and firms are losing faith in a quick return to low inflation, a worrying psychological trend.
This stark contrast between short-term growth and long-term inflation risk is a central theme of the global outlook. The world economy itself is seen as “resilient” for now, with a 3.2% growth forecast. But this resilience is considered temporary, a fleeting moment before the delayed impact of trade tariffs and other risks drag the economy down.
Ultimately, the report serves as a reality check on political optimism. While positive growth figures are welcome, the underlying warnings about persistent inflation, coupled with global risks from restrictive immigration and frothy stock markets, suggest the UK’s economic challenges are far from over.