UK Economic Growth Forecasts Lowered Following Budget-Driven Cost Pressures

The Confederation of British Industry cites rising employer costs and inflation for downgrading growth projections through 2026.

The Confederation of British Industry (CBI) has revised its 2025 economic growth forecast to 1.6%, down from 1.9% projected in June, with 2024 growth also lowered to 0.9%.
The autumn budget, which includes higher employer social security contributions and a 7% increase in the minimum wage, is expected to raise business costs and impact hiring and investment plans.
Inflation is projected to remain above the Bank of England's 2% target until at least 2027, driven partly by increased labor costs and higher prices in retail and hospitality sectors.
The CBI anticipates a gradual reduction in interest rates, with the Bank of England rate expected to fall to 3.5% by late 2026 from the current 4.75%.
Business groups have called for reforms, including changes to business rates and the apprenticeship levy, to mitigate cost pressures and support investment growth.