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The UK economy is forecast to grow by more than previously expected this year before higher energy prices and interest rates hit the economy in 2027, the International Monetary Fund (IMF) said.

The organisation's latest report, which is closely watched by the government, said the UK economy would expand by 1.3% in 2026, up from the 1% it predicted in July, before slowing in 2027.

UK chancellor John Healey said the government would look to "provide some breathing space" for households in the Budget, as he prepares the government's tax and spending plans, which will be announced on 28 October.

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