The economic impact of more than £1trillion of government spending is set to fizzle out in 2026, independent think tank EY Item Club has warned.
While the UK economy is now expected to expand by 1.5% this year, more than the 1% previously predicted, the momentum is not likely to continue into the new year.
EY, The Times reports, indicated the rise was "largely due to increases in government spending".
However, the think tank cautioned that that growth would not be sustained and would ease in 2026 as a result of more restrained public spending growth and the possibility of tax increases in Rachel Reeves' autumn budget.
It predicted GDP will expand by 0.9% in 2026 before increasing to a rate of 1.3% in 2027.
EY Item Club stated: “While the budget is expected to include measures to stimulate growth, meeting the government’s current fiscal rules would also require some tax changes to be introduced in the coming tax year, and this is anticipated to weigh on growth."
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