UK Economic Forecasts: Rate Cut Looms As Inflation Cools

UK economists at Pantheon Macroeconomics expect the UK economy to grow 0.2% in Q3, citing firm activity data and improving sentiment.

GDP and retail sales have held up better than feared. The flash PMI also shows business confidence edging higher.

The consultancy believes growth will remain modest but steady. They expect GDP to rise by 0.2% in Q3 and 0.3% in Q4, noting that

the economy is proving resilient despite multiple headwinds

Softer September inflation prompted a significant policy shift, with a below-consensus print of 3.8% leading to cut inflation forecasts. As a result,

we have brought forward our call for a Bank Rate cut to December

Pantheon is waiting for clarity on fiscal plans before pencilling in another move, noting that

the Budget could yet be more disinflationary than we expect

Author's summary: UK economy to grow 0.2% in Q3.

Exchange Rates UK — 2025-11-02