According to the latest analysis report, Morgan Stanley predicts that the UK economy's growth rate will significantly slow down by 2026. Although the overall forecast risks are balanced, the construction PMI released this week shows weak industry activity, further confirming signals of an economic downturn.

Interestingly, despite a brief improvement before the budget announcement, survey data continues to release pessimistic information. This has a direct impact on central bank policies—Morgan Stanley now believes that the Bank of England is very likely to complete rate cuts before June, pushing interest rates to a terminal level of 3.0%.

The market reacts quickly. Data from the London Stock Exchange shows that investors have almost fully priced in this rate cut path: a 25 basis point cut in the first half of 2026 has been largely priced in, and the possibility of another rate cut in the second half has also been considered. In other words, these expectations are already reflected in current asset prices. For participants concerned with fiat currency policies and asset allocation, this signal is quite clear.