The Labour government was given a boost when the IMF upgraded its growth forecast for the UK economy

The International Monetary Fund has raised its forecast for UK economic growth this year, giving an initial boost to the Labour government.

Treasury Minister Rachel Reeves welcomed the expected growth but said: "There are no illusions about the scale of the challenge facing the economy and the legacy facing the new government."

The Labour Party won a general election less than two weeks ago on a promise to make Britain the fastest growing economy in the Group of Seven nations, at about 2.5 percent a year, by reforming the planning system and increasing public and private investment.

In its latest global growth outlook, the IMF raised its UK growth forecast to 0.7 per cent from the 0.5 per cent it expected in April. In the Group of Seven leading economies, the UK's economic growth rate has risen from the second-lowest in 2023, ahead of Germany, to equal that of Italy and Japan. The United States, Canada and France are expected to see faster economic growth.

Britain's 0.2 percentage point increase was tied for the highest with France. The IMF's forecast for 2025 remains unchanged, when the UK will be the third fastest growing country in the G7 at 1.5%, behind Canada and the US.