Reeves branded ‘determined’ and ‘delusional’ as IMF warns UK is lagging behind Trump’s America

Rachel Reeves was branded ‘delusional’ as she claimed Britain was turning a corner even as the International Monetary Fund (IMF) predicted the economy will remain in the slow lane.

The IMF’s latest forecasts left the outlook for the UK unchanged with growth of just 1.3 per cent this year and 1.5 per cent in 2027.

Britain and Italy were the only members of the G7 group of advanced economies not to be given a growth upgrade for 2026.

Responding to the report, the Chancellor chose to focus not on the forecasts but on the IMF’s estimate that Britain grew by 1.4 per cent in 2025, a small upgrade on its previous 1.3 per cent outlook.

Ms Reeves said it was the third upgrade in a row since April last year and claimed: ‘After years of decline, this is the year the country turns a corner.’

She said Britain was ‘on course to be the fastest growing European economy this year’ – though it is well behind non-G7 Spain – and that this was ‘thanks to the stability we have brought to the economy and the investment we’ve unlocked’

The Chancellor has been called ‘delusional’ as she claimed the economy was turning a corner

But her boasts are likely to ring hollow for businesses who have been battered by a series of tax hikes and at a time when inflation in the UK is the highest in the G7 and unemployment rising, and as wealth creators flee Britain thanks to inheritance and property tax changes.

Tory shadow chancellor Sir Mel Stride said: ‘A 0.1 per cent uptick is not a triumph – and the fact Rachel Reeves is celebrating it shows how desperate she has become.

‘The economy is flatlining. After £66 billion of tax rises, business confidence has collapsed to record lows, inflation and unemployment are up, and growth is flat.

‘Gaslighting the country won’t fix the economy – only a serious plan to lower taxes and control welfare will.’

It comes after Ms Reeves was recently ridiculed for trying to take credit for the surge in the FTSE 100 to record levels – with experts pointing out this had little to do with her policies.

According to the IMF’s report, the UK will lag behind Donald Trump’s America, which is expected to grow by 2.4 per cent this year and 2 per cent in 2027 – in a further blow to Labour’s pledge to lift growth to the fastest in the G7. It will also be slower than Canada in both years.

However, it will remain ahead of sclerotic European rivals Germany, France and Italy this year, according to the IMF’s World Economic Outlook.

Meanwhile, UK inflation is expected to fall to its 2 per cent target by the end of this year – a relief for hard-pressed consumers.

But it gave little reason to cheer, since – the report said – this was because ‘the weakening labour market continues to exert downward pressure on wage growth’.

Tory business spokesman Andrew Griffith said: ‘Rachel Reeves is delusional if she thinks there is anything to celebrate.

‘The IMF confirm that on her watch, UK growth in 2026 and 2027 will be slower than the US, slower than Canada and even slower than most developing countries. Brits are getting poorer as a result.

‘In fact, the only countries we beat are the snail-like EU countries which makes it all the odder that Labour want to tie us more closely to them.’

The IMF report meanwhile slightly upgraded the outlook for global growth this year from 3.1 per cent to 3.3 per cent.

But the forecast came with a major caveat about the potential for trade wars to derail progress. And it reiterated previous warnings that, after surging to stratospheric values, artificial intelligence (AI) stocks could fall causing a wider market slump.

‘Trade tensions could flare up, prolonging uncertainty and weighing more heavily on activity,’ the IMF said. It made no mention of the impact of Donald Trump’s threat to sanction countries opposed to his aim to take over Greenland.