UK’s economy stronger than expected this year, to slow next, says govt
Finance Minister John Healey says the Middle East war is a key factor affecting the economic outlook, with gross domestic product growth expected to slow to 1.0% next year.
Britain's economy is projected to grow slightly faster than initially anticipated this year before slowing down in 2027, according to Finance Minister John Healey's annual budget announcement. The Middle East conflict is a significant factor influencing these forecasts, Healey stated during his presentation to parliament.
Healey revealed that the country's gross domestic product (GDP) is expected to expand by 1.2% in 2026, an increase from the government's earlier estimate of 1.1% following the onset of the US-Iran war. However, the minister cautioned that growth would decelerate to 1.0% in the following year, which deviates from Labour's projection of a 1.6% expansion in 2027 earlier this month.
The government's projections are based on the independent Office for Budget Responsibility (OBR), a fiscal watchdog. Recently, the International Monetary Fund also upgraded its 2026 UK GDP forecast, while simultaneously lowering its outlook for the subsequent year. This development follows Britain's economy surpassing expectations in the second quarter, growing by 0.5% according to official data.
The Bank of England is set to revise its own UK economy forecasts on November 5, coinciding with an anticipated interest rate increase due to persistent high inflation.
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