Plateauconomics

14/10/25
Joseph Quash

The IMF announced its growth projections today, predicting that the UK will place second amongst the G7 economies in 2025, and third in 2026.

Both years are expected to see a consistent growth of 1.3% to the annual change in real Gross Domestic Product, compared to 2% or more in the USA. 

This would see Canada falling to third place, before reclaiming its spot at second in 2026 as it navigates the effects of Donald Trump’s tariffs.

Other members of the economic forum, including Germany, France, Italy, and Japan, are all expected to see growth of between 0.2% and 1.1% this year, before averaging out to between 0.6% and 0.9% in 2026.

This projection was paired with the news that during this same period, the UK is expected to experience the highest levels of inflation in the G7. The World Economic Outlook predicts inflation of 3.4% in 2025, falling to 2.5% the following year. Both of these figures are 0.2% higher than the fund’s previous forecasts in July.

Despite only following the USA in predicted growth figures, the economic health of the UK seems insecure at best, with pressure mounting on Chancellor Rachel Reeves ahead of her Budget next month.

Reeves welcomed the “second consecutive upgrade to this year’s growth forecast from the IMF”, but acknowledged that “for too many people, our economy feels stuck.”

“Working people feel it every day, experts talk about it, and I am going to deal with it.”

Aspects of the economy, though, are not just stagnating but declining. The rise in payroll employment of 10,000, reported by the Office for National Statistics between July and August, was, according to director of economic statistics Liz McKeown, a sign “that the falls we have seen in both payroll numbers and vacancies are now levelling off.”

This number, though, has been offset by a provisional fall in the same number for September. 

The ONS also reported a continuation, albeit a slowdown, in the trend of declining job vacancies, with September’s figures estimating a fall of 9000 available positions. This development comes in tandem with the Office’s labour force survey, which sees unemployment rise to 4.8% across the country, its highest level since the pandemic. 

Rising inflation, rising unemployment and a decline in living standards demonstrate that this growth indicates not only mediocrity, but a widespread failure of that growth to manifest.

What growth does exist in the UK is “driven by rising energy and utility bills”, which evidently hinders the finances of households and hikes shareholder profits – the Joseph Rowntree Foundation projects that average disposable incomes in the UK will be £570 lower than today by 2029 as a result of inflation and stagnating wages.

A Common Wealth think tank study showed that a sum equal to 24.2% of the average energy bill was being extracted in pre-tax profits for shareholders of major generators and networks in 2024. On the first of this month, Ofgem raised the cap on energy bills by 2% to £1755 per year for a typical household.

Increases in GDP driven by necessary consumption of monopolised goods and the privatisation mark-up of services in industries such as water and rail are hollow, and unlikely to be looked on favourably by a squeezed electorate. “The economy,” says The Guardian, “is running hot only for those collecting profits.” 

This projection by the IMF is not a testament to this government’s economic policy, but rather an indication of a deeply, and increasingly, flawed apparatus by which the benefits of that growth are distributed.

© Joseph Quash 2025