UK economy to 'grow twice as fast' as Europe in 2025 on back of October Budget
According to a leading bank's forecast, the UK economy is on track to expand twice as fast as its European peers next year thanks to the spending boosts introduced in October’s Budget.
Analysts at ING have pointed to an estimated growth of 1.4 per cent for Britain's gross domestic product (GDP) in the coming year, outlined in the bank’s annual economic outlook, meanwhile predicting a mere 0.7 per cent increase for the Eurozone economies, as reported by City AM.
The surge in the UK’s economic growth is largely attributed to the £40bn additional spending declared in Chancellor Rachel Reeves’ October Budget – a move that ING anticipates will translate into higher public sector wages and employment. "A lot of the [additional spending] is through extra departmental spending, [which] will inevitably end up in wages," according to ING’s UK economist James Smith, who adds: "That has quite a high fiscal multiplier compared to tax cuts... so I don’t think it’s that controversial to say the growth rate through the first half of next year will be a bit stronger."
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Notwithstanding these positive projections, there are cautionary notes with Smith advising that Reeves’ increase of National Insurance is expected to impact growth in the way typical tax hikes do, rather than inducing an inflationary spike in prices as some analysts might fear.
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