Press & Policy

The IMF’s latest World Economic Outlook shows that the global economy is entering a period of moderate slowdown, with dim prospects in the medium-term, and a pressing need for credible policy responses.

Key findings from the report include:

• Growth outlook: UK GDP is projected to grow 1.3% in both 2025 and 2026, slightly upgraded from earlier in the year and making it the second-fastest growing economy in the G7.
• Inflation trends: UK inflation is forecast to rise to 3.4% in 2025 (up from 2.5% in 2024), before falling back to 2.5% in 2026.
• Trade fragmentation: The UK continues to run a persistent current account deficit, with exports to the US falling post-tariffs. The UK–US Economic Prosperity Deal offers some offset, but global trade fragmentation remains a headwind.

Responding to the IMF’s World Economic Outlook, Dr Liz Cameron CBE, Director and Chief Executive, Scottish Chambers of Commerce, said:

“The IMF’s World Economic outlook for 2025 reflects the uncertainty that businesses across the UK are facing. While the UK’s inflation is projected to peak at 4%, we are also set to be the second-fastest growing economy in the G7 by the end of 2025.

“This seemingly paradoxical forecast is both a testament to the underlying resilience of Scottish businesses, and a stark warning of the challenges looming on the horizon.”

“Businesses are continuing to grapple with the triple hit of higher National Insurance Contributions, an increased minimum wage, and the highest energy bills in Europe. Add to that the full effect of international tariffs coming into force, and many businesses are left with no choice but to pass the increased cost onto consumers. This inevitably dampens demand, drives down sales, and contributes to a gloomy economic outlook.

“This echoes what we’re hearing from businesses across the country: our latest survey shows that excessive costs are forcing firms to pull back on hiring talent, delay productive investment, and raise prices.

“But there’s reason for optimism. Businesses continue to show their resilience in uncertain times. Recent wins, including the UK Government’s trade deal with India and investment announcements from the US show that, despite headwinds, the UK economy remains attractive.

“That’s why the SCC is clear: there must be no new tax rises in the upcoming Autumn Budget, as well as targeted support to help more of our firms feel the benefits of this growth. This means VAT reductions for the hospitality and tourism sectors, reforms to transmission charges to bring down energy bills, and a multi-year freeze on spirits duty to support Scotland’s world-renowned drinks industry.

“Fiscal sustainability is paramount, but it must go hand-in-hand with policies that unlock long-term growth, support business confidence, and ensure Scottish firms remain competitive on the global stage.”

Read The Scotsman’s full story here: The Scotsman