Posted in: UK Outlook
UK Outlook – February 2026
Ongoing moderate growth amidst risks
We have marginally downgraded our 2026 and 2027 GDP forecasts, to 1.0% (from 1.2%) and 1.4% (from 1.5%), reflecting a loss of momentum through late 2025 and ongoing challenges and risks. Unemployment is set to rise more than previously expected – reaching 5.5% this year before levelling off and beginning to fall back through 2027. Wage growth should continue to cool, while inflation looks set to fall back over the coming months. We expect the BoE to deliver two 25bp rate cuts this year, taking Bank Rate down to 3.25% before going on hold through 2027.
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