Economic forecasts: 2026 scorecard

Market Insight:

• 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