Goldman Sachs: UK Growth

UK growth has proved more resilient than expected this year, supported by robust consumer spending, rising business investment and technology-related output, alongside stronger-than-anticipated global demand. Lower seasonal energy consumption, warm weather and promotions have helped households absorb higher energy costs, while utilities and ICT investment have provided a more structural boost. However, we expect growth to slow over the winter as higher energy bills and mortgage rates weigh increasingly on consumers and temporary tailwinds fade. We forecast quarterly growth of 0.2% in Q4 and 0.3% in Q1, although the outlook should improve later in 2027 as gas prices fall, global demand remains supportive and investment in utilities and business technology continues. Our forecasts imply Q4/Q4 growth of 1.9% in 2026, slowing to 1.5% in 2027. Recent economic strength increases the likelihood of a November BoE rate hike, but we expect the subsequent slowdown and easing inflationary pressures to limit further tightening, leaving Bank Rate below market expectations.