BofA Cuts UK Growth Forecast as Energy Prices and Budget Uncertainty Bite

Bank of America (BofA) Securities has downgraded its growth forecast for the UK in 2027, citing higher energy prices and uncertainty ahead of the government's Autumn Budget. The bank expects the UK economy to grow at a rate of 1.2% next year, a 10-basis-point cut from its previous estimate.

The economists behind the forecast, Sonali Punhani and Ruben Segura-Cayuela, also raised their growth forecast for 2026 by 10 basis points to 1.2%, reflecting stronger-than-expected growth in the first half of the year.

Growth is expected to slow in the coming months due to higher energy prices and Budget uncertainty, with risks tilted to the upside as sentiment data has proved resilient.