The UK is still on track to have the fastest growth in the G7 this year - but is exposed to the risk of spiralling inflation.
The IMF now expects Britain to grow by 6.8 per cent in 2021, trimmed slightly from the 7 per cent it predicted in July.
That is ahead of France, which is set to grow 6.3 per cent and the US on 6 per cent - although they sustained a smaller hit from the pandemic.
The UK is also forecast to turn in 5 per cent growth next year, 0.2 per cent higher than previously suggested by the organisation, despite signs of a slowdown over recent months.
However, the latest World Economic Outlook warns there is 'great uncertainty' about the situation, with inflation fears on the rise.
It points to Britain and the US as economies that are particularly vulnerable to a cycle of rising prices.
The IMF report said that problems 'could materialise if pandemic-induced supply-demand mismatches continue longer than expected'.
The IMF now expects Britain to grow by 6.8 per cent in 2021, trimmed slightly from the 7 per cent it predicted in July
The IMF pointed to the success of the UK's vaccine drive as it gave the latest growth estimates
That would lead to 'more sustained price pressures and rising inflation expectations', forcing 'faster-than-anticipated' rises in interest rates.
Job vacancies hit another record high of 1.2million last month amid post-pandemic labour shortages.
The number of posts available spiked again despite unemployment