Britain’s economy is having a mixed year: slightly better than expected on growth, markedly worse on inflation. The IMF this week raised its 2026 growth forecast for the UK to 1.3%. With the Budget approaching, it’s a good moment to take stock of which indicators are beating expectations and which are falling short.
HM Treasury’s monthly compilation of independent forecasts offers a useful scorecard. The consensus for GDP growth now stands at 1.2%, a touch above the 1.1% expected in January and broadly in line with the IMF.
Interest rates have moved contrary to expectations this year. Forecasters began 2026 expecting cuts, but the conflict in Iran pushed up energy prices and put them on hold.
The Bank of England has not raised rates either, although long-term rates have move markedly. The consensus for the Bank rate expects it to stay put: only four of 16 forecasters see a rise before year end.
Inflation is the year’s biggest reversal. Forecasters expected 2.2% at the start of 2026; they now expect 3.3%. The consensus has it falling back to 2.2% in 2027, but the risk is that price pressures prove stickier than that.
House prices are softer but still rising. Growth forecasts have been cut from 2.7% to 1.5%, and mortgage approvals and transactions are down. Yet the market is weathering higher mortgage rates better than might be expected, helped by the real-inflation adjusted price correction of the past few years. Source: Dataloft by PriceHubble, HM Treasury Consensus Forecasts Dec 2025 and Sept 2026.