Overview
- The National Institute of Economic and Social Research (NIESR) has downgraded 2025 UK GDP growth forecasts to 1.2%, citing domestic policy uncertainty and cost pressures as key factors.
- Chancellor Rachel Reeves is projected to miss her fiscal rules by £57–63 billion by 2029/30 unless further tax increases or spending cuts are implemented.
- Reeves' employer national insurance hike has been criticized for slowing hiring and reducing business investment, contributing to weaker growth and lower tax receipts.
- Businesses are delaying investment decisions due to concerns over potential tax hikes in Reeves' autumn Budget, further eroding confidence in the economic outlook.
- NIESR and other analysts argue that domestic policies, rather than external factors like U.S. tariffs, are the primary drivers of the UK's subdued economic performance.