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After a modest rebound in 2024, steady growth is expected in 2025, driven by lower inflation, rising real wages, and easing interest rates, though key economic and social challenges remain.
Last modified: July 18, 2025, noon
The United Kingdom remains one of the world’s largest economies, with a diversified industrial base and global financial leadership. Following a modest rebound in 2024, the UK economy is projected to grow steadily through 2025, supported by falling inflation, rising real wages, and easing interest rates. However, significant economic and social challenges persist.
The cost of living remains the most pressing concern for UK households, with 85% of adults identifying it as a key issue, alongside pressures on the NHS and broader economic uncertainty. Regional inequalities continue to shape the national landscape: London and the East of England lead in Gross Value Added (GVA) and employment growth, while regions such as the North East and parts of Scotland lag behind due to sectoral disparities. The UK faces entrenched income and wealth inequalities. The top 10% of households hold wealth five times greater than the bottom half combined, and income per person in the richest local authority is over four times that of the poorest. Intergenerational and housing wealth gaps are widening, with younger cohorts facing declining homeownership rates. Gender and ethnic disparities also persist in pay, pension wealth, and household income.
Despite these challenges, the UK benefits from strong institutional frameworks, advanced infrastructure, and a skilled labour force. Strategic investment in regional infrastructure and innovation sectors is seen as key to rebalancing growth and addressing long-standing disparities.
