The UK economy is projected to face considerable challenges due to both domestic and international factors, impacting growth for 2025 and 2026. The CBI's Economic Forecast highlights that GDP growth is expected to be lower than previously estimated, with projections dropping to 1.2% for 2025 and 1.0% for 2026. Higher employment costs following the Autumn Budget and increased US tariffs are dampening business investment and export potential. However, gradual improvements in household spending, lower interest rates, and easing inflation may support a recovery starting in 2026.
The unpredictable global outlook combined with rising employment costs and subdued investment intentions creates significant challenges for UK businesses and the economy.
UK GDP growth in 2025 is projected to be 1.2%, a downgrade from December's forecast of 1.6%, reflecting a sluggish start to the year.
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