The National Institute of Economic and Social Research’s (NIESR) latest Economic Outlook predicts that, after a strong start to 2025, the UK economy has lost momentum. GDP grew by 0.7% in the first quarter, boosted by activity brought forward ahead of higher National Insurance Contributions and the National Living Wage rise. But growth slowed to 0.3% in the second quarter and is expected to remain subdued at 0.3% and 0.4% in the third and fourth quarters, respectively. As a result, NIESR now forecasts annual GDP growth of 1.5% in 2025, slightly above its long-run trend of 1.25%, before easing to 1.2% in 2026 and 2027. CPI inflation averaged 3.8% in the third quarter and is projected to stay above 3% until Spring 2026, when favourable base effects should bring it close to target. NIESR expects inflation to fall to 2.7% in the second quarter of 2026 and to reach the 2% target by the third quarter. To read NIESR’s Outlook, go to https://niesr.ac.uk/reports/economic-outlook-autumn-2025.