UK Growth Outlook Holds Steady as BoE Eyes Gradual Rate Cuts

Britain’s economy is expected to grow at a modest pace through 2025 and 2026, according to the latest Reuters poll of 67 economists. The Bank of England is projected to continue its cautious monetary easing cycle, with two more rate cuts anticipated this year.

Key Highlights

- UK GDP growth forecast revised slightly upward to 1.1% for 2025, from 1.0% in the June poll; 2026 growth remains at 1.2%.

- The BoE is expected to reduce the Bank Rate by 25 basis points each quarter, reaching 3.75% by year-end.

- Inflation remains above the 2% target, averaging 3.2% in 2025 and 2.4% in 2026, driven by food and transport costs.

Economic Sentiment and Policy Signals

- Economists cite improving consumer sentiment and resilient credit conditions as signs of stabilization.

- Falling mortgage rates and easing wage pressures may support further rate cuts.

- The BoE has already lowered rates four times since August 2024, from a peak of 5.25%.

Sources: Reuters, FXStreet, US News Money, DeepNewz.