CBI Principal Economist, Martin Sartorius, looks at the road ahead for the UK economy.
UK outlook: muddling through
Our latest forecast expects that UK economic momentum will remain modest, with GDP growing by 1.2% in 2025 and 1.0% in 2026. Household spending is the main driver of growth over our forecast - supported by real incomes gains and lower interest rates - but higher labour costs and global economic uncertainty will weigh on business investment. The increase in employment costs following the Autumn Budget will lead to higher prices, subdued business investment, and slower employment growth. US tariff hikes pose a modest headwind to UK output, primarily through reduced exports and dampened investment. Furthermore, productivity will lag slightly below its pre-COVID trend, which weighs on the UK's long-term growth prospects.
GDP
UK economy will grow at a modest pace through 2026
The UK saw tepid GDP growth of 1.1% over 2024, reflecting a mix of cautious house
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