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In 2026, the UK economy is expected to grow by 1.1 percent, as of the Spring Statement of March 2026. This is weaker than the 1.4 percent predicted in the Autumn Budget from November 2025, with unemployment expected to be slightly higher and inflation forecast to be slightly lower. According to this forecast, the UK's inflation rate for 2026 is expected to average out at 2.3 percent, and the unemployment rate at 5.3 percent.Ìý

Inflation distress continues for UK consumers

°Õ³ó±ðÌýincrease in UK inflation in 2025 looks to have peaked in the third quarter of the year, and is predicted to fall to 2.4 percent by mid-2026. Though this spike in prices has been far less serious than in 2022, when UK inflation reached a peak of 11.1 percent in October 2022, UK households are still suffering from the impact of the previous crisis. In October 2025, approximately 63 percent of UK households were dealing with rising living costs, relative to the previous month, mainly due to rising energy and food costs.Ìý

Unemployment rises in 2025

Aside from rising prices and a slowing economy, the UK has also had to contend with rising unemployment in 2025. As with inflation, however, the rise in unemployment is expected to be less severe when compared with previous periods of high unemployment. Recently, the government has also been concerned about high levels of economic inactivity, especially among young people, with the number of 16- to 24-year-olds not in employment, education, or training approaching one million towards the end of 2024.Ìý