UK Economic Growth Likely to Slow in 2027, Barclays Says

09:13 AM EDT, 10/12/2026 (MT Newswires) -- The UK's economic growth is likely to slow down in 2027 as higher energy prices and interest rates arising from the Middle East conflict add pressure to the cost of living, squeezing households' resources and spending power, according to Barclays. In their assessment of the economic backdrop as part of the latest IFS Green Budget report, analysts at Barclays expect annual gross domestic product growth in real terms to ease to 1.2% in 2027 from 1.4% in 2026. Looking further ahead, annual GDP growth is projected to pick up to 1.5% in 2030 and 1.4% in 2031. Meanwhile, Barclays forecasts headline inflation in the UK will remain above the Bank of England's 2% target until the next year, anticipating an average of 3.1% in 2026 and 3% in 2027. Headline inflation is then anticipated to return to the BoE's target in 2028. Taking inflation into account, analysts expect the central bank to tighten its monetary policy by increasing its key rate by 25 basis points twice, taking the bank rate to 4.25% by February 2027. The bank rate was recently left unchanged at 3.75%. Over the medium term, the BoE is expected to take this back down to 3.25%. Barclays' UK economic forecasts are part of its partnership with the Institute for Fiscal Studies.