The UK economy is projected to grow at an average rate of 1.0% in 2025 and 1.2% in 2026, maintaining the same outlook as the May 2025 forecast. The latest projections reflect gradual recovery, supported by government spending, resilient consumer demand, and easing inflationary pressures.
Key Highlights:
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GDP Growth Stability: The UK’s growth forecast remains unchanged, signaling steady but modest expansion amid global economic uncertainties.
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Inflation Trends: Inflation is expected to moderate to 2.6% by late 2025, aligning with the Bank of England’s target, easing pressure on household spending.
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Monetary Policy Adjustments: The Bank of England’s rate cuts, expected to bring interest rates down to 3.75% by yearend, aim to stimulate investment and borrowing.
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Trade & Investment Outlook: The UK’s export sector faces challenges, particularly due to USEU trade tensions, but domestic investment remains resilient.
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LongTerm Projections: Analysts anticipate gradual improvement in business confidence, with growth accelerating slightly in 2026, driven by private sector expansion and infrastructure projects.
With economic stability in focus, the UK is poised for moderate growth, balancing inflation control, fiscal policy, and global trade dynamics.
Sources: UK Government Forecasts, CBI Economic Outlook