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>>Deutsche Bank warns that the UK's growth is slowing dramatically, heightening the risk of a recession in 2025.

Deutsche Bank warns that the UK's growth is slowing dramatically, heightening the risk of a recession in 2025.

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Weak Early‑2025 Growth

Recent data reveal a faltering UK economy. Manufacturing fell 1.2% MoM, services grew only 0.1% versus a 0.4% forecast, and retail sales dropped 0.8%. Business investment slipped 2.3% in Q1, the sharpest decline since the pandemic. These trends signal sustained weakness.

International Comparison

Compared with peers, the UK is lagging. Q1 GDP growth is 0.1%, below the EU’s 0.3% and the US’s 0.6%. Manufacturing contracts 1.2% while the EU shows a modest rise. Consumer confidence sits at 78.4, far under the 100 optimism mark, dampening demand.

Deutsche Bank Diagnosis

Deutsche Bank attributes the slump to structural factors: high inflation keeping rates up, trade tensions, a stagnant housing market, policy uncertainty and a tight labour market. The bank warns of a “negative feedback loop” where costly financing curtails investment and spending. It assigns a 40% probability of a technical recession in 2025.

Policy Outlook

The Treasury recognises the headwinds but fiscal limits restrict stimulus. The Bank of England must juggle inflation—still above 3%—with growth support. Deutsche Bank’s base case projects 0.4% annual growth, an upside to 0.8% if conditions improve, and a downside recession scenario remains plausible.