ING Economics identifies five factors that could boost UK economic growth more than expected in 2026. Firstly, interest rate cuts by the Bank of England, driven by declining inflation, are anticipated. With headline inflation expected to fall to 2% by April, two additional rate cuts are projected, potentially stimulating economic activity.

The analysis highlights improved corporate and household balance sheets as a critical factor. Household debt has decreased from 134% to 116% of income since 2022, while credit to non-financial corporates has fallen from 70% to 59% of GDP. This healthier financial position could support increased spending and investment.

Household saving behavior and potential 'statistical luck' in growth data are also cited as significant factors. A drop in the savings ratio to 9.6% suggests that households might spend more, potentially boosting growth. Additionally, the UK's past pattern of stronger first-half growth could mechanically lift the annual growth rate in 2026.

Finally, investment in artificial intelligence and closer economic ties with the EU are seen as potential growth drivers. While AI-related investment in the UK lags behind the US, increased focus on this sector could mirror the economic benefits seen in the US. Renewed negotiations with the EU over food standards and emissions trading could also positively impact business sentiment and productivity.