Healey’s plan to cut deficit praised by top economist

By the Editorial Team · Wednesday, October 14, 2026

The IMF has endorsed the UK’s plan to reduce its public deficit, urging Chancellor John Healey to continue with his current fiscal strategy while advising targeted and temporary support for households facing rising energy costs. This backing comes as the IMF raised its 2026 GDP growth forecast to 1.3% amid strong economic performance, though it cautions of a modest slowdown in 2027 due to high oil prices and interest rates.

The International Monetary Fund (IMF) has endorsed the United Kingdom’s strategy to reduce its public deficit, urging Chancellor John Healey to maintain his current fiscal approach. Speaking at the launch of the IMF’s World Economic Outlook (WEO) report in Bangkok, Silvana Tenreyro, the IMF’s economic counsellor, highlighted the UK as a standout among Group of Seven (G7) nations for implementing a clear plan to narrow its budget shortfall.

Tenreyro noted that the UK has already embarked on a consolidation process and advised the government to “stay the course” in repairing public finances. This recommendation comes as Healey prepares to deliver his first budget on October 28, amid mounting calls to introduce substantial energy support for households facing a sharp increase in bills from January.

While acknowledging the pressure to provide relief, the IMF cautioned against broad, indiscriminate subsidies. The WEO report emphasizes that any government assistance should be “temporary, targeted and non-distortionary” to avoid undermining fiscal discipline and economic stability.

The IMF has raised its forecast for UK gross domestic product (GDP) growth in 2026 to 1.3%, an upward revision of 0.3 percentage points from its July estimate. This revision reflects stronger-than-anticipated economic performance in the first half of the year, with GDP expanding by 0.6% in the first quarter and 0.5% in the second quarter. The UK’s Office for National Statistics attributed part of this growth to the expansion of artificial intelligence-related sectors.

Despite this positive momentum, the IMF expects a modest economic slowdown in 2027, projecting GDP growth of 1.2%, slightly down from the earlier forecast of 1.3%. Tenreyro attributed this moderation to sustained high oil prices and rising interest rates, factors that could weigh on household spending and business investment.

The economic landscape has been further complicated by renewed geopolitical tensions in the Middle East, which have prompted upward revisions in inflation and interest rate expectations globally. The Bank of England’s Monetary Policy Committee is widely anticipated to raise its policy rate next month, aligning with similar tightening efforts by the US Federal Reserve, European Central Bank, and Bank of Japan.

Healey’s brief visit to Bangkok this week is part of his final preparations for the upcoming budget. In addition to tackling energy affordability, he is expected to unveil plans to devolve further tax powers to mayoral authorities, aiming to support regional economic development and local governance.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.