Britain is poised to experience economic growth in 2025, yet this recovery may not be robust enough to prevent the Labour government from implementing additional tax hikes before the next election, according to the Financial Times’ annual economist survey.
The comprehensive poll, gathering insights from 96 leading economists, suggests the UK will outperform both France and Germany in 2025. However, the recently announced tax increases targeting businesses and individuals could potentially hamper job creation and broader economic expansion.
The majority of economists project a modest growth rate for the coming year, falling short of the Office for Budget Responsibility’s optimistic 2 per cent forecast for 2025. Chancellor Rachel Reeves, who inherited what she termed “the worst set of circumstances since the second world war,” has already implemented a £25 billion increase in employers’ national insurance contributions, scheduled to take effect in April.
The survey indicates that Britain’s service-oriented economy and improved political stability will provide some buffer against global headwinds, including potential US tariffs under a Trump presidency. Nevertheless, the UK’s growth trajectory is expected to lag behind the United States as the temporary boost from increased government spending diminishes.
Real wage growth is anticipated to continue, offering some relief to households. Yet, the combination of elevated prices, high borrowing costs, and an increasing tax burden is likely to maintain pressure on consumer confidence and job security. The Bank of England is expected to proceed cautiously with interest rate reductions, as inflation persists above the target range.
Business leaders express particular concern about the rising tax burden, with a separate survey of 500 UK executives highlighting the need for regulatory reforms to enhance Britain’s investment appeal. Despite these challenges, 50 per cent of business respondents maintain an optimistic outlook for the UK’s investment landscape in 2025.
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