Your quarterly guide to the UK economy; making sense of the key trends and what's driving them.
Quarterly highlights
Mixed messages on economic momentum over early 2025
The UK economy posted strong growth in Q1 2025, with GDP expanding by 0.7% quarter-on-quarter. However, this sat somewhat at odds with business surveys (including our own), which pointed to weaker momentum over the quarter. The latest CBI Economic Forecast projects that growth will be more subdued going forward, averaging 1.2% in 2025 and 1.0% in 2026.
Inflation remained elevated, and above the Bank of England’s 2% target, in Q2
CPI inflation remained elevated in recent months, reaching 3.5% in April and 3.4 % in May. Price pressures came from higher energy prices (following a 6% increase in Ofgem’s energy price cap), alongside an increase in number of regulated prices. Pass-through of higher business costs may also have played a role, as the rise in employer NICs and the National Living Wage came into effect. The lingering impact of all these factors means that inflation is likely to remain
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