UK economy to grow by 1.0% in 2025 — Reuters poll

A Reuters poll showed the UK economy is expected to grow at a faster pace this year than previously estimated. The upgrade in forecasts is driven by surprisingly strong performance in the first quarter. At the same time, experts do not deny that the improvement may be only temporary. 

The poll was held between May 15 and May 20. Among 50 surveyed economists, 22 raised their outlook for this year’s GDP expansion by 0.25 percentage points on average. The median rose to 1.0% from 0.9%. 

James Smith of ING believes an increase in government spending and consistent wage growth create a favorable environment for the economy and boost the outlook. Meanwhile, the Bank of England sticks to its plan of gradually reducing the interest rate to 3.75% by year-end. 

The inflation rate was 3.5% in April, significantly higher than March's 2.6%. However, analysts expect inflationary pressures to ease in the second half of the year. According to Smith, services inflation could get better in the coming months than the central bank projects.