UK Economy's Growth To Accelerate In 2025 As Barriers Fall

23rd April 2024

While the UK's economic outlook is expected to remain modest this year, growth is predicted to build throughout 2024. That is before accelerating in 2025 thanks to falling inflation, higher consumer spending and anticipated reductions in interest rates, according to the new EY ITEM Club Spring Forecast.

In brief:
The EY ITEM Club Spring Forecast expects the UK economy to grow 0.7% in 2024, downgraded slightly from the 0.9% projected in January's Winter Forecast.

However, GDP growth expectations for 2025 have been upgraded from 1.8% to 2%.

Inflation is forecast to fall below 2% in H2 2024 due to lower wholesale energy prices and slower increases in food and goods prices.

Bank Rate is now expected to fall 75bps in 2024 to 4.50%
The most significant risk to the EY ITEM Club Spring Forecast is the potential effect of ongoing geopolitical tensions, which may push up energy prices. In this scenario, inflation may remain elevated, which could in turn have a marked knock-on effect on interest rates, GDP expectations and household spending power.

Furthermore, while the EY ITEM Club expects the Bank of England to cut rates in 2024, there is no guarantee on the timing and extent of these reductions. Finally, an impending general election means the future path of government fiscal policy isn't clear beyond 2025, which presents a significant unknown for longer-term forecasting.

Read the full report HERE
Pdf 14 Pages.