Growth outlook remains negative for the rest of 2026 – CBI Growth Indicator

Firms across the private sector expect activity to fall in the three months to December (weighted balance of -14%), according to the CBI’s latest Growth Indicator. 

The latest results extend a period of negative predictions for growth that has persisted since late 2024. Declining volumes in distribution (-34%), business & professional (-10%) and consumer services (-12%) are expected to drag on activity. However, expectations generally remain less negative than earlier this year. While manufacturing output is also expected to decline (-6%), these mark the least pessimistic expectations since March. 

The subdued outlook comes as private sector activity fell in the three months to September (-19%). The decline was concentrated in the services and distribution sectors, while manufacturing output declined only very slightly.  

Alpesh Paleja, CBI Deputy Chief Economist, said: 

“The outlook for growth remains subdued. The picture is mixed across sectors, particularly with some signs of resilience and even mild improvement in parts of manufacturing and professional services. But these are far outweighed by challenges weighing on conditions for all businesses. Cost pressures remain strong, especially around energy and employment and, coupled with weak demand, this continues to put pressure on margins, recruitment and investment plans.  

“Uncertainty ahead of next month’s Budget is also holding back activity in some sectors. Against the backdrop of renewed fiscal pressures, the Budget must draw a clear red line under any more rises in the cost of hiring, investing and doing business. 

“The Chancellor must focus on easing the cumulative burden of costs, as an entry point to spurring dynamism and activity. Removing legacy policy costs from business’ electricity bills, exploring options to reduce employer National Insurance Contributions, and committing to a clear path for business rates reform would be important first steps to building business confidence and putting the country back on a path to sustained growth.” 

A balance is the weighted percentage of companies reporting an increase minus those reporting a decrease.