Economic deep dive: Q4 2024
Your quarterly guide to the UK economy; making sense of the key trends and what's driving them.
17 Jan 2025, 1 min read
Quarterly highlights:
Steady pace ahead for the UK economy
Our latest forecast projects that UK GDP will grow by 0.9% in 2024. Looking ahead, economic activity will increase at a steady, but unimpressive, pace of 1.6% in 2025 and 1.5% in 2026.
Inflation set to remain above 2% through 2026
CPI inflation rose to 2.6% in November, mainly driven by rising transport costs. We expect inflation to remain consistently above the Bank of England’s 2% target rate in 2025 (2.6%) and 2026 (2.5%), partly reflecting the passthrough of Autumn Budget measures to higher prices.
Bank of England to cut rates more gradually in 2025
Higher inflation over our forecast means that we now expect a more gradual pace of interest rate cuts. Specifically, we anticipate that the Bank’s Monetary Policy Committee (MPC) will reduce Bank Rate by 25 basis points each quarter, until reaching a terminal rate of 3.50% in Q1 2026.
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