The Chancellor’s reputation is on the line as the British economy has been downgraded yet again.
The EY Item Club had forecasted for the UK economy to grow 1.5% for 2025, EY economists have now downgraded this to just 1%.
In 2024 the economy grew by 0.8% and after Labour’s disastrous Autumn Budget the economy was exceptionally poor in the second half of the year.
Rachel Reeves was accused of talking down the UK economy and EY now forecasts Britain will grow better in 2026 at 1.6%, this is far lower than the Chancellor’s target.
Last Morgan Stanley economists cut their growth forecast from 1.3% in 2025 to 0.9%.
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Anna Anthony, EY UK regional managing partner, said, “Despite the subdued finish to 2024, there are signs the UK economy could turn a corner and achieve stronger levels of growth this year.
“Following a prolonged period of financial uncertainty, we should start to see an improvement in consumer confidence as real wages continue to increase, with many households feeling less of a financial squeeze by the end of 2025.
“The outlook for UK business is more of a mixed picture.
“While business investment is set to increase, tightening financial conditions and global trade uncertainty are expected to weigh on private sector confidence in the first half of this year.”
Conservative Shadow Chancellor Mel Stride warned, “The biggest barriers to growth in this country are Rachel Reeves, Keir Starmer and their job destroying budget.
“The forecasts showing the UK economy will grow slower than predicted is a direct result of Labour’s budget, their punishing jobs tax and companies being crushed under Labour’s huge increase of new regulations.
“Unfortunately for millions of people up and down the country a vast amount of damage has now been done. Their budget has killed growth stone dead. Under new leadership, the Conservatives will hold Labour to account for their economic mismanagement and set out a clear plan to return growth our country.”
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