Conservative response to IMF downgrade

Shadow Chancellor, Sir Mel Stride said: 

"Being handed the biggest downgrade in the G7 is a clear verdict on Rachel Reeves' choices - and she's got no one to blame but herself.

"The Chancellor hiked national insurance in her first budget, doubling inflation and sending unemployment soaring. She is driving the hospitality industry out of business with business rates increases, and planning the first hike in fuel duty in 15 years. Her 'plan' to keep costs down has left us with the highest inflation in the G7, with businesses closing and the cost of living skyrocketing.

"The Conservatives urge international partners to see Rachel Reeves as a cautionary tale of what happens when a politician has no clue what they're doing and chooses to hammer business relentlessly."

ENDS

Notes to Editors

• The IFM downgraded the UK's growth forecast by 0.5 percentage points compared to the previous forecast – the largest downgrade in the G7. The IMF downgraded the UK's growth forecast by 0.5 percentage points to 0.8 per cent – compared to 0.2 percentage points for the Euro area (IMF, World Economic Outlook, 13 April 2026, archived).

• The IMF warned that the effects of the Middle East conflict will be felt most strongly by ‘net energy-importing economies', including the UK. ‘Under the reference forecast, growth in advanced economies is projected to be 1.8 percent in 2026 and 1.7 percent in 2027. The overall effect on growth in advanced economies of the conflict in the Middle East is modest, lowering growth by 0.2 percentage point in 2026 relative to the preconflict forecast, thanks to positive terms-of-trade effects in the United States and stronger growth momentum and offsetting government measures in Japan, with a large negative effect expected only in some net energy-importing economies, such as the euro area and the United Kingdom' (IMF, World Economic Outlook, 13 April 2026, archived).

• The IMF said Labour's choices increased inflation in 2025. ‘In the United Kingdom, inflation, which in 2025 increased partly because of one-off changes in regulated prices, is expected to pick up again temporarily toward 4 percent before returning to target by the end of 2027 as the effects of higher energy prices fade and a weakening labor market continues to exert downward pressure on wage growth' (IMF, World Economic Outlook, 13 April 2026, archived).

• The IMF warned the unemployment rate will hit 5.6 per cent in 2026 – higher than Germany, Japan, and the United States. The IMF expect the UK unemployment rate to hit 5.6 per cent in 2026, higher than Germany, Japan, and the United States at 3.9, 2.9, and 4.4 per cent respectively (IMF, World Economic Outlook, 13 April 2026, archived).