UK economic growth downgraded in blow to Rachel Reeves
Why UK’s economic growth has been downgraded
- The Confederation of British Industry (CBI) has downgraded the UK's economic growth forecast due to rising costs and weak business investment, impacting the government's growth ambitions.
- The CBI now projects the UK economy to grow by 1.2 per cent this year, down from its previous forecast of 1.6 per cent, and has also lowered the 2026 growth forecast from 1.5 per cent to 1 per cent
- Higher employment costs, stemming from the autumn budget's increases to national insurance contributions and the national minimum wage, have led to higher pricing and reduced capital expenditure and hiring among firms, according to the CBI.
- Shadow chancellor Mel Stride criticised Labour's policies, claiming that higher employment costs are killing growth.
- The CBI's chief economist, Louise Hellem, emphasised the need for the government to use its industrial strategy to drive a thriving environment for businesses, given the challenges posed by domestic and global headwinds.