UK Growth Set to Halve After Iran War Hit, Economists Warn

Forecasters have warned that UK growth could halve this year as already-cautious consumers batten down the hatches and the Bank of England prepares for potential interest-rate hikes.

Pantheon Macroeconomics sees a 0.8 percentage point hit over two years — a blow that would leave growth at 0.6% in 2026, down from 1.3% in 2025. KPMG and Barclays now expect growth to ease to 0.7% this year — downgrades from 1% and 1.1% respectively.