Investing.com -- UBS has revised its GDP growth forecasts for the U.K. for 2025 and 2026, citing stronger-than-expected economic growth in the first quarter of 2025 and anticipated smaller-than-expected negative indirect effects.
The Swiss multinational investment bank on Monday raised its U.K. GDP growth forecasts by 0.1 percentage points (pp) each, now projecting growth of 0.8% for 2025 and 1.1% for 2026.
Robust GDP performance in February 2025 played a key role in this upward revision.
However, UBS maintained its 2027 U.K. GDP growth forecast at 1.4%.
This follows a series of recent economic forecasts and revisions by major financial institutions, reflecting the ongoing adjustments in the global economy.
Last week, Barclays (LON:BARC) revised its first-quarter U.K. GDP growth estimate to 0.7% quarter-on-quarter, up from 0.2%, following February’s strong GDP data, which showed a 0.5% month-on-month rise.
In a note on Friday, Barclays also pointed to signs of cooling in the U.K. labor market, including increased redundancy notifications and a decline in permanent job placements.
On Tuesday morning, the Office for National Statistics reported that the unemployment rate held steady at 4.4% in the three months to February, as expected.
However, wage growth across the economy, excluding bonuses, rose to an annual rate of 5.9% in the same period, slightly above the revised 5.8% in January.
In its note on Monday, UBS also raised its Eurozone GDP growth forecasts for the third time in a week, citing uncertainty from U.S. tariff policy and Europe’s fiscal stance.
The bank now expects Eurozone growth of 0.7% in 2025 and 1.0% in 2026, both up 0.2 percentage points, while the 2027 forecast remains unchanged at 1.5%.