EY Item Club has lifted its forecast for UK economic growth in 2025 to 1.5%, supported by more than £1 trillion in public spending, though it warned that momentum will fade next year as fiscal tightening and potential tax rises weigh on activity, the Times reported on Monday. The think tank, which uses the same economic modelling as the Treasury, had previously expected growth of 1.0% for 2025 but said the economy has ‘displayed greater momentum’ in the first half of the year. UK output rose 0.7% during the period, the fastest pace among G7 economies. However, the EY Item Club warned that the effect of higher public spending will fade in 2026, when tighter fiscal policy and potential tax rises could slow growth. It now expects GDP to expand by 0.9% next year before edging up to 1.3% in 2027.
