UK Economy 'Not on Verge of Recession' Despite Modest Growth Forecasts

Bank of England Governor Andrew Bailey has sought to ease concerns over a potential recession in the UK, stating that the economy is not on the verge of such an event. Despite forecasts indicating modest growth and inflation above target, Bailey believes there are reasons for cautious optimism.

The Bank of England's own projections show GDP growth at 1.1% in 2026 and 1.2% in 2027, with inflation expected to peak at around 3.3%. The interest rate has been held steady at 3.75%, a decision made through a 6-3 vote.

Bailey highlighted several headwinds facing the economy, including a weakening labor market, weak productivity, and an aging population. He also noted energy price volatility as a wildcard, particularly given the UK's exposure to global markets.