United Kingdom: Growth cools as inflation risks build – Deutsche Bank
Deutsche Bank economists Sanjay Raja and Maui Brennan say the UK enters autumn as the fastest-growing G7 economy, helped by strong ICT and AI-related investment and improving productivity.
Deutsche Bank economists Sanjay Raja and Maui Brennan predict the UK's second-half growth will slow down due to the fading effects of the warm summer and World Cup, rising energy costs, and waning retail confidence. The UK is currently the fastest-growing G7 economy, with signs of productivity improvement and a stabilising labour market.
However, no other G7 country has experienced growth faster than the UK this year. Experts anticipate a slowdown in the latter half of 2026, primarily because the temporary boosts from the pleasant summer and global sporting event will naturally diminish. Additionally, higher prices for household bills and the likelihood of seasonal factors impacting momentum suggest the UK economy may not sustain its ~2% annualised growth rate into the second half.
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