The United Kingdom’s Office for Budget Responsibility (OBR) on Wednesday revised its 2025 GDP growth forecast to 1.5%, up from 1% projected in its March outlook. The upgrade follows stronger-than-expected economic activity in the first quarter, where growth touched 0.7%, partly driven by frontloading ahead of United States-imposed tariffs.
However, economic momentum weakened in the second and third quarters, both coming in below earlier expectations. The OBR said it anticipates only a gradual pickup in quarterly growth in the near term amid ongoing geopolitical uncertainty and subdued business and consumer confidence, including concerns over further tax increases.
The fiscal watchdog also expects inflation to remain elevated for longer, projecting the UK’s consumer price index (CPI) to rise 3.5% on average in 2025 and 2.5% in 2026, before easing back to the Bank of England’s 2% target in 2027. Meanwhile, the unemployment rate is forecast to hover around 5% until 2027.
