UK Faces Economic Strain as Bank of England Warns of Stagflation Risks

The Bank of England lowers growth forecasts, raises inflation projections, and cuts interest rates in a challenging economic environment.

The Bank of England has halved its 2025 GDP growth forecast to 0.75%, citing stagnant productivity and economic challenges.
Inflation is now expected to peak at 3.7% later in the year, nearly double the central bank's 2% target, driven by rising energy prices.
Interest rates were reduced by 25 basis points to 4.5%, with further cuts anticipated, though rising inflation could complicate this trajectory.
UK house prices rose 0.7% in January, reaching a record average of £299,138, though annual price inflation slowed in most regions.
Chancellor Rachel Reeves faces criticism over her fiscal policies, including a £25bn National Insurance hike, which businesses argue is harming private sector growth and productivity.