Growth outlook least pessimistic in two years - CBI Growth Indicator

Business’ expectations for growth in the next three months are at their least negative in two years, according to the CBI’s latest Growth Indicator. Nonetheless, this result extends a period of negative predictions for growth that have persisted since late 2024.

The improvement in the outlook (weighted balance of -8%) is driven primarily by distribution firms (-17%), where expectations for sales growth are also at their least pessimistic in two years. Similarly, manufacturers expect output to stabilise (-1%) in the next three months.

Services firms continue to expect a mild decline in activity, but predictions for growth in both business & professional services (-5%) and consumer services (-16%) are less negative than the averages seen over 2026 to date.

Alpesh Paleja, CBI Deputy Chief Economist, said:

“The easing pessimism about growth prospects chimes with a range of other data signalling a degree of resilience in the economy and will come as welcome news to the Chancellor ahead of the Budget. There are more examples of businesses reporting firmer order books, improving enquiries and new contract wins, particularly among those benefitting from specialist areas of demand.

"However, these signs of improvement remain uneven, and are often driven by firm-specific factors rather than a broad-based strengthening in demand. Businesses continue to report cautious consumers, delayed investment decisions, and persistent cost pressures squeezing margins and operations.

“Fears about the Budget have compounded these pressures, presenting a new headwind to growth over recent months. If the government is serious about matching its economic ambitions with action, the Chancellor must now take the bold decisions needed to give business the breathing space to invest, hire and grow. That means cutting the costs holding firms back, simplifying the tax system and accelerating decisions that unlock growth. Get those conditions right and firms across the UK will respond with more jobs, increased investment and stronger growth.”