The National Institute of Economic and Social Research (NIESR) projects the UK economy to grow merely 1.2% in 2025, down from 1.5%. The slow growth, combined with persistent inflation, threatens Rachel Reeves' budget strategies, prompting the possibility of higher taxes in autumn. NIESR attributes these economic challenges largely to government actions rather than global trade downturns. Business investment is more affected by the prospect of tax rises than tariff threats from the US. As the Bank of England considers interest rates, the outlook remains grim with inflation continuing to pose serious concerns.
NIESR anticipates the UK's economy will grow by only 1.2% in 2025, a decrease from the previous estimate of 1.5%, highlighting concerns over domestic challenges.
The combination of persistent inflation and slow growth is set to jeopardize Rachel Reeves' budget strategies, increasing the likelihood of higher taxes this autumn.
The report emphasizes that the economic dilemmas facing the UK this year stem primarily from governmental decisions, rather than external factors like global trade slowdowns.
NIESR predicts the Bank of England may be reluctant to make further cuts to interest rates due to sustained inflationary pressures despite a slow growth forecast.
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