The CBI says improving sentiment will be welcome news for the Chancellor, but its own forecasts show GDP growth slowing from 1.4 per cent this year to just 0.9 per cent by 2027.
The Confederation of British Industry expects UK GDP growth to slow to 1.1 per cent in 2026 and 0.9 per cent in 2027, down from 1.4 per cent in 2025 — a trajectory that sits at the weaker end of official projections compiled by HM Treasury, which put 2026 growth at 1.3 per cent, with forecasts ranging from 0.9 per cent to 1.6 per cent.
The CBI’s Deputy Chief Economist, Alpesh Paleja, said that easing pessimism about growth prospects would come as welcome news to the Chancellor ahead of the Budget. The figures show that while business sentiment may be improving, the underlying economic picture remains modest at best.
That gap between mood and reality is worth keeping in mind. ONS data shows real GDP grew by 0.5 per cent in the three months to June 2026. On a monthly basis, GDP grew 0.4 per cent in both June and July, before easing to 0.1 per cent in August — a more modest pace, though not a dramatic reversal.
On the jobs market, the ONS put the UK unemployment rate at 4.7 per cent for June to August 2026, compared with an HM Treasury forecast of 5.1 per cent unemployment by the fourth quarter of the year. The employment rate for people aged 16 to 64 stood at 75.3 per cent over the same period.
Inflation adds another layer of pressure. HM Treasury’s forecast compilation puts CPI inflation at 3.6 per cent in the fourth quarter of 2026 — well above the Bank of England’s 2 per cent target — leaving households and businesses still contending with elevated prices even as confidence edges upward.
So the picture is mixed: sentiment is improving, but the CBI’s own numbers point to an economy that keeps slowing. Whether easing pessimism translates into stronger activity before the Budget remains an open question.
Source: @CBItweets