UK economic growth forecast upgraded as optimism increases

The British economy will grow faster than previously expected, according to the latest forecasts from the British Chambers of Commerce (BCC).

The business and industry lobby group now predicts the economy will grow 0.8% this year, up from a previous estimate of 0.5%. For 2025, the growth forecast has been revised upwards to 1%, compared to a previous projection of 0.7%.

This positive adjustment follows a stronger than expected performance at the start of the year, with Britain recording the fastest quarter of output growth since 2022 at 0.6%. Although the UK economy briefly entered a technical recession at the end of 2023, it is now on track for a modest recovery. The BCC noted that while long-term growth prospects remain subdued, current indicators show there is potential for economic momentum if properly supported.

“There is life in the British economy, but if it is to gain momentum it needs to be nourished,” said Vicky Pryce, chair of the BCC's economic advisory board. She emphasized the need for politicians to have sustainable, long-term economic plans, especially with the upcoming general elections on July 4. “Companies will look to politicians who demonstrate that they have sustainable, long-term economic plans. These should play to Britain's strengths and give businesses confidence,” said Pryce.

Despite the improved forecasts for 2024 and 2025, the BCC maintains its growth forecast for 2026 at 1%. The organization warned that the economy's underlying momentum is expected to slow over the next two years after a strong start to 2024. The forecast predicts second-quarter growth of 0.4%, while subsequent quarters will slow to 0.3 % and 0.2%.

Furthermore, the BCC expects inflation to reach the Bank of England's 2% target next year, but expects it to rise slightly to an average of 2.2% by the end of 2026. The outlook for interest rates suggests that they are likely to fall in the second half of the year. years, which could further impact economic conditions and business confidence.

Overall, the BCC's upgraded forecasts reflect cautious optimism about Britain's economic prospects, highlighting the importance of supportive policies and strategic planning to support and build on the recovery.

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