LONDON, May 18 (Xinhua) -- The International Monetary Fund (IMF) on Monday urged Britain to press ahead with plans to cut public borrowing, warning that high debt, rising energy costs and political uncertainty are putting fresh pressure on the government's economic agenda.
In its latest assessment of the British economy, the IMF said Britain has remained resilient in recent years, but the conflict in the Middle East is now clouding the outlook. Higher energy prices are expected to squeeze household budgets, raise business costs and push inflation higher again later this year.
The IMF projected Britain's economy to grow by 1.0 percent in 2026, down from 1.4 percent in 2025. Growth is expected to recover gradually from the second half of 2027 if the energy shock fades.
Inflation, however, is expected to rise temporarily and peak just below 4 percent by the end of this year before easing back to the Bank of England's 2 percent target by the end of 2027.
The renewed inflation pressure is expected to further complicate the government's efforts to support households while keeping public finances under control.
Britain's public debt burden remains historically high. According to the Office for National Statistics, public sector net debt excluding public sector banks stands at 93.8 percent of gross domestic product (GDP) at the end of March 2026, a level last seen in the early 1960s.
The warning also comes at a difficult political moment for Prime Minister Keir Starmer's government, which is under mounting pressure after heavy local election losses and growing questions over his leadership. The turmoil has made it harder for the government to advance economic reforms and reassure markets at a time when borrowing costs remain elevated.
Against this backdrop, the IMF said the government's plan to reduce the deficit by around half a percentage point of GDP each year over the next four years is appropriate and should help stabilize public debt over the medium term.
But it warned that the plan must be carried out firmly, given market pressures and elevated borrowing costs. Any further support for households hit by higher energy bills should be targeted, temporary and funded by savings elsewhere, rather than by additional borrowing, it said. ■