UK Growth Outlook Downgraded by Economic Forecasters, Hitting Chancellor Reeves
Leading forecasters have downgraded the UK’s growth outlook, impacting Chancellor Rachel Reeves’ plans for economic recovery.
UK, Rachel Reeves, GDP, Economic Growth, EY ITEM Club
London: The UK economy is expected to grow slower than earlier thought. After a stagnant period last year, the EY ITEM Club has revised its growth forecast. They now predict a 1% GDP growth in 2025, down from 1.5%.
This downgrade is a setback for Chancellor Rachel Reeves. Businesses are under pressure from upcoming tax and wage increases in April. The forecasts also show only 0.8% growth last year, indicating a slight improvement.
Last year ended weakly, with a disappointing 0.1% GDP rise in November. October even saw a 0.1% decline. The economy had flatlined during the third quarter.
However, there’s hope for stronger growth next year. The forecasts suggest a 1.6% rise in 2026. Anna Anthony from EY believes the UK economy could improve this year.
She noted that as real wages rise, consumer confidence may also increase. Many households could feel less financial pressure by the end of 2025.
Yet, the outlook for businesses is mixed. While investment is expected to rise, financial conditions and global trade uncertainties may affect confidence in the first half of this year.