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BoE likely to keep rates on hold as UK growth cools
Standard Chartered raised its 2026 UK growth forecast to 1.3% but expects GDP growth to ease to 0.2% to 0.3% q/q in Q3 and Q4.
Standard Chartered’s Christopher Graham said UK growth showed resilience in Q2, with GDP rising 0.4% quarter over quarter, supported by private consumption and business investment. He noted government spending acted as a drag, pulling growth down by -0.3% q/q.
The bank expects a slowdown after Q2, forecasting growth of 0.2% to 0.3% q/q in both Q3 and Q4. It also raised its full-year 2026 growth forecast to 1.3%, from 1.0%, citing the strength in Q2 and momentum shown in June data.
Graham pointed to June monthly activity of 0.3% m/m, driven by services growth of +0.4% m/m, while industrial production (-0.2% m/m), manufacturing (-0.5% m/m), and construction (-0.1% m/m) contracted.
Despite the stronger-than-expected Q2 print, Standard Chartered said the Bank of England’s decision this year should hinge more on inflation and labour-market signals. With rates described as restrictive, it still expects the BoE to keep rates on hold this year.