#economic-forecasts

#economic-forecasts

Rachel Reeves told MPs that living standards are expected to improve over the course of this parliament. Her central claim was that households would be around £1,000 a year better off by the time voters next go to the polls. The projection is based on forecasts for real household disposable income - a measure that tracks the amount people have left after tax and inflation.

While many economists believe it will return to stronger growth in 2026, hopes of a quick recovery are fading amid doubts over Berlin's planned investment spree under Chancellor Friedrich Merz. Before Christmas, Germany's Bundesbank lowered its growth forecast for 2026 to 0.6%, down from its previous June forecast of 0.7%. However, the central bank raised the forecast for 2027 to 1.3%, predicting that the pace of economic activity would pick up from the second quarter of 2026.

An inquiry into the role of the UK government's economic forecaster is being launched by a group of MPs, after the body came under intense scrutiny in the run-up to the Budget. The Treasury Committee will examine the Office for Budget Responsibility's (OBR) first 15 years and consider potential reforms, including any improvements or changes to its remit. The inquiry comes after questions over the OBR's influence were raised ahead of the Budget.

This revelation was like a football team being deducted points before the start of the season. Reeves was known to be angry and dismayed that the downgrade should take place on her watch rather than any time previously but she quickly used it to put Whitehall chiefs on notice that a three-year spending review would be tougher than previously expected.

Starmer emphasized that some figures concerning the public finances, particularly the projected shortfall, are not recognized by him and indicated a need to prioritize living standards.

"If current trends hold, average global growth for the 2020s would reach just 2.5 per cent - making this the worst-performing decade for the world economy since the 1960s."

In the face of potential tariffs impacting global trade, investors are gravitating towards defensive stocks as a safeguard against market instability.

The OECD has lowered the UK economic growth forecast for 2026 from 1.2% to 1% due to heightened trade tensions and elevated uncertainty.

Purchase applications increased by 11% week over week and 13% year over year, highlighting a significant rebound after three weeks of declines.

The advance estimates reveal a concerning contraction of the US economy at an annualized rate of 0.3% in Q1 2025, particularly troubling as it follows President Trump's initial 100-day milestone.