Investing.com — Deutsche Bank (ETR:) has revised its projections for the UK economy, signaling a slower growth trajectory in 2025.
In a note released Tuesday, the bank predicts GDP growth of 1.3% for the year and 1.4% for 2026, down two-tenths below its previous forecasts, respectively. Weaker private sector demand, higher payroll costs, and subdued employment growth are cited as key factors shaping this outlook.
“Looser fiscal policy will likely subtract from private sector spending. Weaker private demand and higher payroll costs will likely lead to lower employment growth and wage settlements. Higher prices – though temporary – are likely,” Deutsche Bank senior economist Sanjay Raja said in a note.
The UK labor market is expected to soften further. Deutsche anticipates the unemployment rate will peak at 4.6% by late spring, driven by falling job vacancies and rising employer costs due to increased National Insurance Contributions (NICs). Wage growth is projected to moderate, with average pay settlements slowing to 3.75%-4% in 2025 and to 3-3.25% in 2026, down from…
