The International Monetary Fund's latest projections show that artificial intelligence is pushing UK economic growth to accelerate. Over the past six months, the improvement in the UK's economic outlook has ranked among the best of major economies.

In its latest World Economic Outlook, the IMF expects UK GDP growth to reach 1.3% in 2026, an upward revision of 0.5 percentage points from its April forecast, even though the energy shock triggered by the Iran war has lasted longer than initially expected. The IMF believes the UK is becoming one of the beneficiaries of the current technology boom, with AI-related investment and exports providing support for economic growth.

Among G7 countries, only Germany has matched the UK in the scale of upward revisions to its economic outlook since April, with German exporters also benefiting from the global AI construction wave. Compared with the past, UK companies have become more capable of coping with energy and trade disruptions. The IMF says companies worldwide are broadly diversifying their supply chains, reducing dependence on inputs such as oil and fertilizer.

IMF Chief Economist Silvana Tenreyro said the economic outlook for countries around the world is "markedly divergent." Despite ongoing geopolitical conflicts, "technology-related exports and investment have provided a buffer for some economies," she said. The upgrade to the UK's forecast stems from recent economic data: UK GDP grew 0.6% in the first quarter of 2026 and continued to grow 0.5% in the second quarter. In recent years, the UK economy has often seen brief rebounds early in the year, only for growth to falter in autumn as uncertainty rises ahead of the annual budget. But economists are increasingly convinced that this year's data reflects genuine economic resilience rather than a seasonal short-term pulse.

Economists highlighted a sharp rebound in business investment, concentrated in AI-related areas: software, hardware, data centers and supporting infrastructure; output has also been strong in industries such as programming, consulting and professional services, which provide supporting services for AI adoption. UK Chancellor of the Exchequer John Healey welcomed the IMF's forecast. He said it shows the UK has demonstrated "strong international resilience" in the face of conflict in the Middle East, and noted that the IMF expects the UK to have the lowest fiscal deficit among G7 countries by 2031.

However, the upgraded forecast is unlikely to bring Healey much comfort ahead of his first budget: the energy shock may fuel a new wave of inflation, and the UK economy is about to face a test. Tenreyro warned: "The global economy has shown resilience, but that resilience is approaching its limits." The IMF forecasts UK GDP growth of 1.2% in 2027, a slight downward revision from its April forecast and significantly below the 1.6% given by the UK Office for Budget Responsibility (OBR) when it published fiscal forecasts in March.

Barclays' chief UK economist Jack Meaning said at a budget preview event hosted by the Institute for Fiscal Studies that if the current momentum in technology investment continues, it could provide a substantial boost to UK economic growth in the coming years. But in reality, high interest rates and inflation in the UK are likely to slow the pace of AI expansion. Meaning added that in the long run, the AI dividend depends on whether the spread of the technology can deliver sustainable productivity gains. A surge in capital investment will boost total GDP in the short term, but only a step-change in productivity can alter the UK's long-term growth trajectory.