NIESR lowers the UK's 2026 growth forecast to 0.9% (prev. 1.4%) and raises its inflation forecast to 4.7% (prev. 3.3%) at the start of 2027; the BoE may have to respond with big rate hikes if energy disruption is prolonged
SourceNewsquawk
SectionGlobal News
- The UK would face recession and inflation of 5% in a more adverse scenario in which oil prices spike to around USD 140/bbl and Hormuz remains closed.
- The Middle East shock will also worsen the UK’s public finances. Relative to the OBR's outlook, debt-servicing costs are likely to be higher, growth weaker, and pressure greater for additional support to compensate vulnerable households.
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via NIESR