UK GDP forecast 2025| Statista

In 2024, the gross domestic product (GDP) of the United Kingdom grew by 0.9 percent and is expected to grow by just one percent in 2025 and by 1.9 percent in 2026. Growth is expected to slow down to 1.8 percent in 2027, and then grow by 1.7, and 1.8 percent in 2027 and 2028 respectively. The sudden emergence of COVID-19 in 2020 and subsequent closure of large parts of the economy were the cause of the huge 9.4 percent contraction in 2020, with the economy recovering somewhat in 2021, when the economy grew by 7.6 percent.

UK growth downgraded in 2025

Although the economy is still expected to grow in 2025, the one percent growth anticipated in this forecast has been halved from two percent in October 2024. Increased geopolitical uncertainty as well as the impact of American tariffs on the global economy are some of the main reasons for this mark down. The UK's inflation rate for 2025 has also been revised, with an annual rate of 3.2 percent predicated, up from 2.6 percent in the last forecast. Unemployment is also anticipated to be higher than initially thought, with the annual unemployment rate likely to be 4.5 percent instead of 4.1 percent.

Long-term growth problems

In the last two quarters of 2023, the UK economy shrank by 0.1 percent in Q3 and by 0.3 percent in Q4, plunging the UK into recession for the first time since the COVID-19 pandemic. Even before that last recession, however, the UK economy has been struggling with weak growth. Although growth since the pandemic has been noticeably sluggish, there has been a clear long-term trend of declining growth rates. The economy has consistently been seen as one of the most important issues to people in Britain, ahead of health, immigration and the environment. Achieving strong levels of economic growth is one of the main aims of the Labour government elected in 2024, although after almost one year in power it has so far proven elusive.