United Kingdom

This report does not constitute a rating action. Overview Institutional and economic profile Flexibility and performance profile The U.K. is the world's sixth-largest economy, characterized by relatively high GDP per capita, developed product and labor markets, and a large financial services sector. Effective monetary policy, but fiscal position is constrained. S&P Global Ratings revised its growth forecast for the U.K. slightly upwards for 2025 to 1.2%, with further growth limited by energy costs, a still relatively tight monetary policy, and a lackluster global economy. However, in the first half of 2025, the U.K. secured trade deals with the U.S., India, and the EU, which should support confidence and growth. The Bank of England (BoE)'s monetary policy is characterized by a

...The U.K. economy performed slightly better than expected in the first half of 2025, and it negotiated a number of trade deals in the period, leading us to raise our real GDP growth forecast to 1.2% for 2025. This is up from our estimate of 0.9% in June 2025 and slightly higher than the 1.1% growth achieved in 2024. Last year's growth was uneven: a strong first half was followed by stagnating output in the second half, with net exports being the biggest drag. In 2025, the U.K. front loaded exports to the U.S. ahead of U.S. tariffs on imports being imposed, leading to growth of 0.7% in the first quarter, which was then followed by 0.3% growth in the second quarter. Weak domestic demand, partly due to higher taxes on employment, ongoing elevated price pressures, and increasing global trade barriers, will affect the economy in the second half of the year and limit growth through 2028. We nevertheless expect a net rebound in growth from 2026, with real GDP growth in 2026-2028 averaging 1.4%,...

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