Morgan Stanley has trimmed its expectations for UK economic growth this year on a recent slowdown and signs of labour market weakness.
Gross domestic product would likely tick up by 0.9% in 2025, according to the Wall Street bank, against a previous estimate of 1.3%.
This would be off the 1.5% seen by the Bank of England, which it had said should be driven by hiked public spending under chancellor Rachel Reeves following October’s Budget.
Morgan Stanley’s latest forecast follows stagnant growth over the three months to September last year though, and forecasts for unchanged GDP over the final quarter.
Despite two interest rate cuts by the Bank of England in recent months, the bank warned the knock-on effects from a 16-year high rate of 5.25% remained.
“While the peak impact of the BoE's policy tightening is likely behind us, its drag on the economy still persists,” a note read.
Monday also saw separate warnings emerge from businesses over job cuts and slowing investment ahead in response to tax hikes laid out in the Budget.