UK Economic Growth Forecasts Down In 2025 – EY – Irvine Times

EY ELET CLUB’s economic forecast has become the most influential group that reduces its forecasts against the background of continuous pressure on businesses facing higher taxes and raising salaries in April.

It is another blow to the hopes of Chancellor Rachel Reeves to quickly increase the UK economy to help support plans for the cost of the government.

The UK’s gross domestic product (GDP) is expected to increase by 1% in 2025, according to EY’s winter forecasts.

Previously, he predicts 1.5% growth per year.

The forecasts also indicated a 0.8% growth throughout the economy last year, which only implies a slight acceleration of economic growth.

It comes after the weaker second half of 2024, with the worse than the expected increase in GDP in November and a 0.1% monthly decline in October.

The economy was leveled in the third quarter of the year.

Nevertheless, the United Kingdom is expected to see a stronger growth next year, with forecasts showing that it can increase by 1.6% in 2026.

Anna Anthony, regional managing partner of EY UK, said: “Despite the muffled completion by 2024, there are signs that the UK economy can turn an angle and achieve more strong growth levels this year.

“After a prolonged period of financial uncertainty, we need to begin to see an improvement in consumers’ confidence, as real salaries continue to increase, with many households feeling less than financial expirations by the end of 2025.

“The UK business forecasts are a more mixed picture.

“While business investment is to increase, financial conditions and uncertainty in world trade are expected to weigh the private sector’s confidence in the first half of this year.”

However, the study showed that household confidence should be improved, with consumer costs predicted to increase by 1.6% per year.

However, it comes against the background of continuous inflation with the Consumer Price Index (CPI), which will remain above the target percentage of 2% for the year, averaging 2.8%.

It states that this inflation pressure will be partly related to companies affected by higher contributions for national employer insurance (NICS), handing out some customer costs.

EY suggested that constant inflation would lead to a decrease in interest rates this year, with interest rates of the United Kingdom reaching 3.75% by the end of 2025.