There was good news for the government today ahead of next week's Budget after the International Monetary Fund upgraded its UK GDP forecast for 2024 to 1.1%, up from 0.7% in July.

There was no change to the IMF’s 2025 growth forecast of 1.5%.

The IMF also predicted that UK inflation for 2024 was set to be slightly higher than expected at 2.6%, having previously pointed towards a 2.5% rate.

The economic upgrade comes ahead of Chancellor Rachel Reeves first autumn Budget.

She said: “It’s welcome that the IMF have upgraded our growth forecast for this year, but I know there is more work to do.

“That is why the Budget next week will be about fixing the foundations to deliver change, so we can protect working people, fix the NHS and rebuild Britain."

Dan Coatsworth, investment analyst at AJ Bell, said the upgraded UK economic forecast from the IMF has certainly come at the right time for the Chancellor.

He said: “Stronger than previously expected economic expansion this year means the government isn’t starting its ‘difficult decisions’ strategy to repair the nation’s finances from a very weak position. The IMF’s new UK forecast of 1.1% growth in 2024 is lacklustre compared to 3.2% world economic growth, but something is better than nothing given the uncertain backdrop.”

He warned that there is a big risk the Budget will contain a lot of bad news for consumers and businesses and potentially causes a wobble to the UK economy.

He said: “The government has a desire to make the country stronger but it feels like this will be a two-stage approach. First it must fill the multi-billion-pound black hole in public finances and only then can it be in a position to accelerate economic growth.

“The government needs to start its journey from the highest economic point possible as it might be heading down the hill before it can climb back up and reach higher peaks.

“As for Labour’s mission for the UK to have the highest sustained growth in the G7 over consecutive years by the end of the parliament, it’s going to have to do a lot better than 1.1% to hit that goal.”

The IMF warned over recent volatility in the financial markets during the summer, with Japanese markets witnessing their worst day of trading for decades in August before staging a recovery.

It said recent volatility “has heightened anxiety over the appropriate monetary policy stance – especially in countries where inflation is persistent and signs of slowdown are emerging.”