In an analytical note published on Monday, analysts at the American lending giant Morgan Stanley lowered their expectations for GDP growth in the UK for the year 2025 to 0.9%, down from 1.3% in their previous forecast. This comes at a time when the Bank of England has raised interest rates in the UK to their highest levels in 16 years, with the main interest rate now at 4.75%, significantly impacting the country's economic activity. In the note, Morgan Stanley analysts based their new expectations on the following: - The recent slowdown in GDP growth in Britain. - Clear signs of weakness in the UK labor market. - The long-term effects of the interest rate set by the Bank of England, which is the highest in 16 years, and which will significantly affect economic growth. The analysts at the American bank clarified that the impact of the peak tightening of monetary policy by the Bank of England is likely to have ended, but they noted that this does not mean that the pressure on the economy is no longer ongoing, which severely hinders GDP growth.
