- UK economic growth moderated in the second quarter to 0.3%, down from 0.7% in the first three months of the year. Momentum is expected to slow further in the second half of the year, with growth for 2025 as a whole forecast to be around 1%, a similar pace to last year.
- Uncertainty about the global trading environment continues to weigh on sentiment. The latest Deloitte CFO survey for the second quarter of 2025 shows that geopolitics remains the top external risk for businesses, with finance leaders choosing to prioritise defensive strategies such as cost reduction. CFOs expect capex, discretionary spending and hiring are expected to fall over the next 12 months. Other timely economic indicators suggest consumers also remain cautious, prioritising saving over spending.
- The Bank of England cut interest rates by 0.25 percentage points to 4% in June and signalled a gradual approach to further rate cuts this year. Inflation remains above the Bank of England’s 2% target. The Bank expects inflation to peak at 4% in September, due to rising household energy bills, before slowly falling back to target next year.
- Subdued economic activity and higher than expected borrowing have increased speculation that taxes may have to rise, or spending cut, in the upcoming Autumn Budget in order to meet the government’s fiscal rules.
- Despite higher taxes, government debt is expected to remain at a high level throughout the parliament.
- Timing: the Autumn Budget will take place on 26 November 2025.
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