Warning Signs: UK Forecast to Have Weakest Growth Among G7 Countries

As of May 11, 2025, the UK is projected to have the slowest economic growth among the world’s richest nations in the coming year. According to the Organization for Economic Co-operation and Development (OECD), the UK’s GDP is expected to grow by just 1% in 2025, falling behind all other G7 countries. Factors contributing to this sluggish outlook include the lingering effects of earlier interest rate hikes, stubborn inflation, and tight fiscal policies that continue to limit consumer spending and business investment. The economic landscape remains challenging, with global uncertainty further weighing on domestic prospects.

The International Monetary Fund (IMF) presents an even gloomier forecast, cutting the UK’s 2025 growth estimate to 0.6%. This downgrade is largely due to tighter monetary policy aimed at controlling inflation and ongoing pressures from high energy costs. Despite these setbacks, the UK government has committed to long-term fiscal discipline while investing in key areas such as infrastructure and public services. Chancellor Jeremy Hunt has acknowledged the delicate balancing act between containing inflation and stimulating sustainable growth, emphasizing that short-term sacrifices are necessary to restore economic stability.

To support recovery efforts, the Bank of England has reduced interest rates to 4.25% in hopes of easing borrowing conditions and encouraging economic activity. However, analysts remain skeptical about the effectiveness of rate cuts alone, especially when combined with government measures such as tax increases and spending restraint. Critics argue that such austerity-style policies risk suppressing demand and deepening the slowdown. As the UK struggles to regain momentum, it faces growing pressure to reassess its economic strategy to avoid falling further behind its global peers.