Announcements this week of further reductions to the Bank of England Bank Rate and trade agreements with the U.S. and India are welcome developments following a subdued period for the UK economy over Q1 2025.
Weak growth and economic uncertainty have loomed large on the economic outlook at the beginning of this year. Despite beating recent market expectations, UK GDP growth remains weak, with limited confidence in credible growth being sustained over the remainder of the year. Pessimism in the outlook is also driven by continued inflationary pressures, limited job creation, and deteriorating consumer sentiment.
Recent economic volatility caused by U.S. trade policy decisions is yet to be reflected in much of the reported data, with ongoing tensions, particularly with China, likely to contribute to prolonged economic uncertainty and global recessionary concerns. The trade deals announced this week by the UK government will seek to mitigate these impacts in the near-term while laying the ground for longer term growth.
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