UK Economic Growth Forecast for 2025 Slashed to 1%

The revised projection reflects slower-than-expected recovery, higher taxes, and global trade uncertainties.

The EY Item Club has downgraded the UK's 2025 GDP growth forecast from 1.5% to 1%, citing stagnant growth in late 2024 and ongoing economic pressures.
Higher employer National Insurance contributions and a 6.7% minimum wage increase are expected to strain businesses, slowing investment and potentially increasing unemployment to 4.6%.
Consumer confidence may improve as real wages rise, with household spending projected to grow by 1.6% in 2025, though inflation is forecast to average 2.8% for the year.
Interest rates are expected to be cut quarterly in 2025, potentially reaching 3.75% by year-end, offering some relief to businesses and consumers.
Global trade uncertainties, including potential impacts from U.S.-led tariff policies, pose additional risks to the UK's economic recovery.