"Growth is projected at around 1.3% in 2025, remaining at 1.3% for 2026, as household spending and government investment spending lend support to economic activity. Global trade frictions, rising borrowing costs, and weak productivity continue to cloud the outlook for the UK economy, but this does not make the UK an outlier - global growth is forecast to slowly decline from 3.3% in 2024, to 3.2% in 2025 and 3.1% in 2026."
"The inflation picture is less positive, as the UK is projected to have the highest annual average inflation in the G7 economies in 2025 and 2026, at 3.4% and 2.5% respectively, and is expected to remain well above target for several more quarters. That persistence limits the Bank of England's room to cut interest rates further and complicates the Treasury's task of stimulating much-needed growth."
UK GDP growth is forecast at about 1.3% in 2025 and 2026, supported by household spending and government investment. Global growth is expected to ease from 3.3% in 2024 to 3.1% in 2026, leaving the UK the second-fastest-growing G7 economy after the USA. Annual average UK inflation is projected at 3.4% in 2025 and 2.5% in 2026, the highest in the G7. Persistent inflation limits the Bank of England's scope to cut rates and complicates fiscal stimulus. Labour market loosening should moderate wage growth. Higher debt-servicing costs and slower revenues leave little fiscal room; any Autumn Budget easing must be targeted to avoid reigniting inflation or undermining confidence.
Read at London Business News | Londonlovesbusiness.com
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