Looking Back at 2025 Predictions

The author reflects on their predictions for 2025, acknowledging that precognition might not be their strongest suit. Despite this, they didn’t do terribly badly, considering how often forecasters who influence policy and the economy get it wrong.

Review of 2025 Predictions

The author’s first prediction was that the Office for National Statistics (ONS) would confirm a recession, which requires two consecutive quarters of negative growth. Although the economy has hit the skids, the UK has avoided that fate so far. However, the Organisation for Economic Cooperation and Development (OECD) revised down its UK growth forecast from 1.75% to 1.4%, which the author considers a half-point win.

The author also predicted that the Bank of England would cut rates, but only twice. While the direction of travel was correct, the detail was incorrect, as December’s 0.25% reduction was the fourth cut of the year. Inflation was predicted to peak above 3%, which it did, reaching 3.8%. The author also correctly predicted that Rachel Reeves would have to borrow heavily.

Lessons Learned

The author’s predictions for 2025 were not entirely accurate, but they did get some things right. They learned that making predictions can be challenging and that it’s essential to be cautious and consider multiple factors. The author’s score for 2025 is three out of six, which is not bad considering the complexity of economic forecasting.

Predictions for 2026

The author is back with new predictions for 2026, hoping to improve their score.

Prediction One: No New Taxes

The author predicts that there will be no new taxes in 2026. They believe that Rachel Reeves or her successor won’t dare clobber voters for a third straight Budget, as it would be political suicide.

Prediction Two: Inflation Will Fall

The author predicts that inflation will fall further, but the Bank of England will miss its 2% target. They believe that the evidence is on their side, and the forecasters may actually be right for once.

Prediction Three: Interest Rates Will Fall

The author predicts that interest rates will fall further, to 3.25%. They believe that the Bank of England’s rate-setting Monetary Policy Committee remains split, and rates will be held in February before being cut again.

Prediction Four: New Chancellor by Year’s End

The author predicts that there will be a new chancellor by the end of 2026. They believe that Keir Starmer isn’t cutting the mustard as prime minister, and Labour is in a deep hole. The author thinks that the local elections will be brutal, and MPs will act to save their skins.

Prediction Five: Gold and Bitcoin Will Rise

The author predicts that gold and bitcoin will run hot on the investment markets, with silver close behind. They believe that priced in dollars, these assets hedge against US inflation, and investors will go looking for cover.

Prediction Six: Economic Improvement

The author predicts that things will improve in the second half of 2026. They admit that this is more hope than expectation, but if the Budget proves less painful and interest rates end the year lower, the economy should pick up a little bit.

Conclusion

The author concludes by reflecting on their predictions for 2026, hoping that they will be more accurate than those for 2025. They acknowledge that making predictions is challenging and that the future is inherently uncertain. Nevertheless, they are optimistic that the economy will improve, and their predictions will come true.