At the BHTA 2025 Joint Section Meeting, Glynn Jones from the Bank of England presented ‘The economic outlook for the UK’.

A slow‑moving recovery after the pandemic

Glynn noted that once the Bank changes the bank rate, it can take around 18‑24 months before it has an impact on consumers and businesses, so the economy is still absorbing the impact of earlier rate increases.

The UK economy has struggled to grow post-covid. It has seen near‑stagnation since mid‑2024 due to domestic and international uncertainties that have affected consumers and businesses. The Bank’s central forecast foresees a gradual upturn, with annual GDP growth rising to roughly 1.75 percent by the end of the three‑year horizon, still below the pre‑financial‑crisis trend of more than two percent.

Household spending is held back by uncertainty: the saving ratio has climbed to 11 percent despite real income gains from cooling inflation and still‑firm wage settlements.

On the corporate side, investment intentions remain positive but subdued, reflecting persistent domestic and global uncertainties since the 2016 referendum.

Temporary rise in inflation, but disinflationary forces build

Headline CPI has nudged above three percent, largely because of one‑off increases in regulated utility tariffs and energy bills. The Monetary Policy Committee is “looking through” this move; futures curves point to lower energy costs than in 2022, and domestic demand is not running hot.

More persistent gauges of price pressure are easing: services inflation and wage growth, which peaked close to eight percent, have slowed as vacancies fall and labour‑market slack emerges. On current projections, CPI returns to the two percent target during 2026 so long as inflation expectations remain anchored.

External headwinds weigh on trade and sentiment

Globally, growth has slowed to about half its pre‑pandemic pace amid heightened tariff uncertainty and the re‑routing of supply chains. UK net trade is therefore expected to exert a modest drag on output throughout the forecast. Tariff‑related disinflation should dampen import prices in the near term, while the longer‑term effects on competitiveness remain uncertain. Energy markets, though still volatile, are not assumed to repeat the 2022 price shock in the Bank’s baseline.

Labour‑market adjustment under way

Vacancies have fallen sharply from their 2022 peak, and evidence points to a pause in hiring as firms rebuild balance sheets and respond to higher borrowing costs. Wage settlements are moderating in line with this softer demand for labour.

Structural issues, including elevated inactivity linked to ill‑health and recent shocks such as Brexit, the pandemic, and the energy crisis, may be weighing on potential supply, raising questions about the economy’s speed limit; however, reliable data on these shifts will take time to emerge.

Earlier this month, Glynn Jones from the Bank of England gave an important presentation to British Healthcare Trades Association (BHTA) members about the UK’s economic outlook.

The talk took place at the BHTA’s inaugural joint meeting for the Children’s Equipment, Independent Living, and Mobility sections on 5 July 2023. This event ran at the Walton Hall Hotel and Spa in Warwickshire and provided insightful presentations for attendees and demonstrated the value of being a BHTA member.

One of the key presentations from the day was from Glynn with a UK economy forecast.

He explained that trade shock has negatively impacted the UK economy, including challenges around export and import. Inflationary pressures means that the UK has been poorer overall.

The most recent UK economy forecasts – from May 2023 – reveal that:

• The outlook for growth and employment has improved.
• Inflation is too high – the Bank of England has raised interest rates to counter this to ensure inflation fails.
• Inflation is predicted to drop to two percent by the end of 2024. By the end of the year, inflation should be halved.

See below some interesting slides from Glynn’s presentation about Consumer Prices Index (CPI) inflation trends and forecasts.

However, inflation coming down will be slower than its sharp increase. As the UK imports a lot of food and energy, this has caused major inflation. Supply-side shocks are also a big factor, added Glynn.

Additionally, wage inflation has increased. Employers, on average, are offering two to three percent pay increases. If margins have been squeezed and there are no productivity gains within firms, this all means companies have to increase their prices, he underlined.

The UK’s labour market is tight because of inactivity due to sickness and ill health, such as anxiety, long waiting lists, and mental health decline, Glynn pointed out. The upside, he continued, is that there has been growth in employment in the UK. Last year, unemployment was at the lowest it had been in 50 years.

Looking at gross domestic product (GDP) growth, the demand outlook for May 2023 is stronger than February 2023, partly owing to lower energy prices. GDP growth is positive throughout, Glynn added, rising by a quarter of a percent in 2023 and forecasted to rise by three quarters of a percent in 2024 and 2025.

In the near term, unfortunately, growth prospects within the UK remain weak. Find out more in the slide below.