HSBC cuts Britain’s growth forecast ahead of Healey’s Budget

By the Editorial Team · Wednesday, October 28, 2026

HSBC has lowered its UK GDP growth forecast for 2027 to 1.1 percent, citing inflation and higher interest rates, while also projecting a rise in unemployment to 5.2 percent. The revised outlook precedes Chancellor John Healey’s upcoming budget and comes as HSBC reports a 32 percent increase in pre-tax profits despite a 7 percent drop in its shares.

HSBC has revised down its economic growth forecast for the United Kingdom, lowering its projection for gross domestic product (GDP) growth in 2027 to 1.1 percent. This marks a reduction from the 1.4 percent forecast at the beginning of the year and is below the bank’s previous estimate of 1.2 percent published in August. The updated outlook reflects concerns about rising inflation and higher interest rates, which are expected to weigh on consumer spending and the housing market.

The adjustment comes ahead of Chancellor John Healey’s first budget announcement, scheduled for tomorrow. HSBC’s revised outlook also includes a forecast increase in the unemployment rate to 5.2 percent, up from an earlier estimate of 4.7 percent. The unemployment rate for 2025 is anticipated to be 4.9 percent.

Despite the downgrade in economic growth expectations, HSBC reported a 32 percent rise in pre-tax profits, reaching $9.6 billion (£7.2 billion) for the three months ending September 30. Revenues increased by 5 percent to $18.6 billion. Profit figures were somewhat boosted by a $1.1 billion provision related to the Bernie Madoff scandal recorded in 2025, which affected comparisons with the previous year.

HSBC’s shares fell by as much as 7 percent following the profit announcement, as the results narrowly missed analyst projections. The bank announced plans for a new share buyback programme valued at up to $1 billion.

The profit surge arrives amid speculation that the government may increase the corporation tax surcharge on banks. One proposal would raise the surcharge from 3 percent to 8 percent. However, the New Economics Foundation, a think tank formerly led by Energy Secretary Miatta Fahnbulleh, has criticized the proposed increase as insufficient. Economist Abhijay Sood from the organization indicated that a more aggressive tax approach might be necessary.

Pam Kaur, HSBC’s chief financial officer, reaffirmed the bank’s commitment to the UK, stating that regardless of any new bank tax, HSBC intends to remain headquartered in the country. She emphasized the bank’s focus on supporting customer growth aligned with the UK’s economic agenda and declined to speculate on specifics of the upcoming budget.

HSBC is undergoing a significant restructuring under the leadership of CEO Georges Elhedery, who took charge in September 2024. The bank has been closing, selling, or merging various business units and reducing its workforce, including thousands of jobs in the UK. It has realized $1.9 billion in cost savings this year, approaching its $2 billion target for 2024. Additionally, HSBC plans to use artificial intelligence to reduce its UK financial adviser headcount in wealth management by approximately 70 percent.

Labour unions have called on the government to implement a bank tax to support families and businesses amid ongoing cost-of-living pressures. Paul Nowak, general secretary of the Trades Union Congress, said the bank’s strong results illustrate that financial institutions can afford to contribute more.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.