Andrew Wishart of Berenberg said that the weakness of the UK economy has exceeded expectations, which may cause inflation to fall faster and accelerate the pace of the Bank of England cutting interest rates. He said that the UK GDP fell by 0.1% in October, extending the cumulative decline in output since June to 0.4%. He said that recent survey data shows that this slump has continued since then. This may be due to deteriorating fundamentals rather than a decline in budget-related confidence. Berenberg currently predicts that interest rates will be cut four times by July 2026 by 25 basis points each, reducing interest rates to 3.0% compared to the previous forecast of 3.5%. “A period of weakness is necessary to bring inflation down to an acceptable level. And it is increasingly likely that this period of weakness will be worse than we expected,” Wishart said.

Andrew Wishart of Berenberg said that the weakness of the UK economy has exceeded expectations, which may cause inflation to fall faster and accelerate the pace of the Bank of England cutting interest rates. He said that the UK GDP fell by 0.1% in October, extending the cumulative decline in output since June to 0.4%. He said that recent survey data shows that this slump has continued since then. This may be due to deteriorating fundamentals rather than a decline in budget-related confidence. Berenberg currently predicts that interest rates will be cut four times by July 2026 by 25 basis points each, reducing interest rates to 3.0% compared to the previous forecast of 3.5%. “A period of weakness is necessary to bring inflation down to an acceptable level. And it is increasingly likely that this period of weakness will be worse than we expected,” Wishart said.