Goldman Sachs Raises UK GDP Growth Forecasts

Goldman Sachs has increased its forecasts for UK economic growth in 2025 and 2026 by 0.1 percentage points to 1.6% and 1.5% respectively, after the Labor Party's victory in the recent elections. 

The bank expects the Labor Party's fiscal policy agenda to provide a modest boost to near-term demand growth.

Investors are currently pricing in over a 60% chance that the Bank of England will cut interest rates at its next meeting on August 1st. This would be the first rate cut since the start of the pandemic, and would provide some relief for homeowners who have faced rising mortgage rates since 2024.

The Labor Party won 412 seats, more than the 326 required for an outright majority in the House of Commons to form a government on their own. This is slightly fewer than the record 418 seats won by Tony Blair's Labor Party in 1997.

In contrast, the Conservative Party under Rishi Sunak recorded their worst result since the turn of the century, winning only 121 seats compared to 365 just five years ago under Boris Johnson's leadership.

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