Here’s what Barclays thinks UK interest rates, growth, and unemployment will do every year to 2030
Key Points
- Barclays' baseline forecast now has the UK bank rate averaging 4.1% in 2026 and 4.3% a year from 2028 through 2030.
- Six months ago the same tables put the rate at 3.4% in 2026 and 3.5% in 2028.
- The bank cut its 2026 UK GDP growth forecast to 0.4% from 1.1% and raised unemployment to 5.3% from 4.9%.
- Its downside scenario models a 19.3% fall in UK house prices in 2027 and unemployment at 7.8%.
- Barclays cut the weighting on both upside scenarios and raised the baseline weighting to 39.5%.
Barclays expects the UK bank rate to average 4.3% a year from 2028 through 2030, up from the 3.5% it forecast six months ago.
The bank set out the figures in its interim results for the six months ended 30 June 2026, which disclose the five macroeconomic scenarios it runs to calculate expected credit losses across its £376.8bn loan book.
Barclays refreshed the scenarios in the second quarter, with the baseline reflecting the consensus forecasts available at the time of the refresh. The baseline carries a 39.5% weighting, and the bank publishes a full five-year path for each variable.
| Measure | 2026 | 2027 | 2028 | 2029 | 2030 |
|---|---|---|---|---|---|
| UK GDP growth | 0.4% | 1.1% | 1.4% | 1.4% | 1.5% |
| UK unemployment | 5.3% | 5.3% | 5.0% | 4.9% | 4.9% |
| UK bank rate | 4.1% | 4.4% | 4.3% | 4.3% | 4.3% |
| UK house prices | 1.3% | 1.6% | 3.9% | 3.0% | 3.9% |
| US GDP growth | 1.7% | 2.0% | 2.1% | 2.1% | 2.1% |
| US unemployment | 4.4% | 4.3% | 4.3% | 4.3% | 4.3% |
| US federal funds rate | 3.7% | 3.8% | 3.8% | 3.8% | 3.8% |
Barclays describes a baseline in which global growth slows modestly as higher US tariffs, retaliatory measures and persistent uncertainty disrupt trade flows and weigh on investment, while domestic demand in advanced economies holds up relatively well.
Headline inflation stays elevated and sticky, particularly through imported goods and energy components, and the softening in labour markets happens gradually. On a quarterly basis, the bank puts the UK unemployment peak at 5.4% and the US peak at 4.5%.
What changed since December?
The December 2025 tables set the UK bank rate at 3.4% for 2026, 3.4% for 2027 and 3.5% for 2028. The current tables raise those to 4.1%, 4.4% and 4.3%, a move of up to a full percentage point.
Barclays also cut its 2026 UK GDP growth forecast from 1.1% to 0.4%, raised 2026 unemployment from 4.9% to 5.3%, and cut its 2026 house price growth forecast from 2.9% to 1.3%.
Barclays cut the weighting on both upside scenarios, to 13.7% from 14.4% for Upside 2 and to 27.3% from 27.4% for Upside 1, and lifted the baseline weighting to 39.5% from 38.5%.
The bank attributes the lower upside weights to the deterioration in the UK GDP outlook within the baseline, which moves the baseline further from the upside paths. Downside 1 carries 12.5% and Downside 2 carries 7%.
The downside and upside paths
Barclays calibrated its downside scenarios around a severe escalation in geopolitical tensions centred on a prolonged Middle East conflict, with disruption at critical maritime chokepoints, surging insurance costs and sharp rises in oil and gas prices.
Under Downside 2, UK GDP contracts 0.5% in 2026 and 4.1% in 2027, unemployment averages 7.8% in 2027, house prices fall 12.0% then 19.3%, and the bank rate rises to an average 5.1% in 2027 before easing.
Downside 1 has UK GDP falling 0.1% and then 1.6%, with house prices down 5.4% and 9.2%.
Under Upside 2, higher labour force participation and productivity lift UK GDP growth to 3.8% in 2027, house prices rise 14.2% that year, and the bank rate falls to an average 3.0% by 2028.
The five weighted scenarios produce a total expected credit loss of £5,969m, 2.1% above the loss the baseline alone would generate. Group credit impairment charges for the half were £1,394m, a loan loss rate of 62bps, and Barclays expects the full-year rate to land around the top of its 50-60bps through-the-cycle range.
