UK Economy Seen Growing 1.3% in 2026 as Energy Bills and Rates Rise
Updated
Updated · OilPrice.com · Sep 21
UK Economy Seen Growing 1.3% in 2026 as Energy Bills and Rates Rise
3 articles · Updated · OilPrice.com · Sep 21
Summary
KPMG forecast the UK economy will grow 1.3% in 2026, but said activity will weaken in the second half as households face higher energy bills and slow wage growth.
A roughly 4% October rise in Ofgem’s energy price cap is expected to lift inflation again, while the Bank of England is seen raising its base rate from 3.75% to 4% in November.
Higher borrowing costs linked to the Iran war have already cut the government’s £23.6 billion fiscal headroom by about £9 billion, and weaker growth could trim another £2 billion before the Autumn Budget.
KPMG said longer-term growth will also be constrained as labour-force gains fade, and argued that £47 billion of extra investment in seven underfunded English regions could add £25 billion to GDP over five years.