UK Outlook – September 2025
Moderate growth amidst fiscal challenges.
We have slightly adjusted our GDP growth projections, pushing up this year to 1.3% (from 1.1%) and reducing 2026 to 1.2% (from 1.3%). The upcoming Budget will require measures to reduce the deficit, weighing a bit on activity next year. We expect growth to pick up to 1.5% in 2027 as the global economy strengthens and monetary easing boosts demand. Unemployment is set to rise to about 5% by year end before levelling off, with wage growth continuing to cool. Inflation pressures have surprised on the upside and while we continue to expect disinflation in 2026, it is likely to be more gradual than previously hoped. As a result we now expect the BoE to postpone its next 25bp rate cut until February next year.
Read the UK Outlook in full here: