World Economic Outlook: UK Growth and Inflation

Lord Londesborough Excerpts

Wednesday 22nd April 2026 Lords Chamber

Asked by

[Lord Londesborough]

To ask His Majesty’s Government what assessment they have made of the estimate in the International Monetary Fund’s latest World Economic Outlook, Global Economy in the Shadow of War, published on 14 April, that the UK will have the lowest per capita growth and the joint highest inflation rate in the G7 this year.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, we did not start this war, but it affects us. The IMF’s updated forecasts build on its judgment that the UK is more exposed to energy price shocks than our counterparts—a problem this Government are tackling but which the previous Government failed to address in 14 years. The IMF has described our plan as the appropriate response and forecasts that the UK will be the fastest-growing European G7 economy this year and next.

[Lord Londesborough (CB)]

I salute the Minister for his stout defence and robust response, but it is not altogether shared by the gilt markets: witness our highest borrowing costs for 18 years. It is not just the IMF but the OECD—both have cut their growth forecast for the UK by a greater margin than for any other G7 country. Yes, they flag up the openness of our economy and the gas-intensive nature of our energy mix, but they also point to the UK’s zero per capita growth throughout the second half of last year. With inflation now rising, is the Chancellor not premature in making repeated claims of having built stability and resilience in our economy?

[Lord Livermore (Lab)]

No, I do not think she is, because the spring forecast showed precisely that: that Britain is well placed to weather this conflict. Inflation was at 3% and it was set to fall to target; borrowing was set to fall more over this Parliament than in any other G7 economy; GDP per capita was forecast to rise by 5.6% over this Parliament, compared with a fall of 0.2% in the previous Parliament; and we had increased headroom to over £23 billion. As I say, all these things mean we are well placed to weather this conflict. On the actual outturn data, last week’s figures show that the economy grew faster than expected in the three months to February, growth for the three months to January was upgraded, and yesterday’s labour market figures for February showed unemployment coming down and real wages continuing to rise.