"UK GDP is expected to grow by only 1.0% in 2026, reflecting a landscape of weak productivity, business investment, consumer spending, and ongoing global uncertainty. It is then forecast to pick up to 1.3% in 2027 and then 1.1% in 2028."
"Business investment is expected to flatline this year (0%), a revision downwards from the previous forecast (0.9%). It is expected to pick up again, to 1.3% in 2027. The rapid adoption of AI that the BCC has seen from its own evidence could support productivity gains, but this is likely to begin beyond 2028."
"Higher oil and gas prices linked to the current conflict in the Middle East are expected to push CPI inflation up to 2.7% by the end of 2026 (compared to 2.1% in the previous forecast). Energy prices are assumed to rise in the near term before easing later in the forecast period."
"The BCC expects the unemployment rate to rise to 5.5% in 2026 (up from the previous projection of 5.1%) with high labour costs dampening the hiring appetite of business."
The UK economy faces subdued growth prospects with GDP expanding only 1.0% in 2026, gradually improving to 1.3% in 2027 and 1.1% in 2028. Services sector growth continues to lead but is decelerating to 1.2%, while construction and manufacturing contract. Business investment flatlines at 0%, reversing previous optimism, though AI adoption may drive future productivity gains beyond 2028. Inflation pressures emerge from Middle East conflicts, pushing CPI to 2.7% by end-2026 before easing toward 1.9% in 2027. Wage growth remains elevated near 4% through 2026, moderating thereafter. The Bank of England is expected to maintain rates at 3.75% in 2026, declining to 3.25% in 2027. Unemployment rises to 5.5% as high labour costs constrain business hiring.
#uk-economic-growth #inflation-and-monetary-policy #labour-market #business-investment #sectoral-performance
Read at London Business News | Londonlovesbusiness.com
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