UK economy stuck in ‘slow lane’ as business investment to slump
A slump in business investment will drag on the UK economy’s potential for growth over the rest of the year as industry chiefs warned that the country was stuck in the “slow lane”. The British Chambers of Commerce has warned that the UK economy is set for a slowdown in momentum over the remaining two [...]
The UK economy is facing a slowdown as business investment is expected to decline, according to the British Chambers of Commerce (BCC). The organization warns that the nation is stuck in the "slow lane," with a contraction in investment and poor construction figures hindering further growth. Despite a slight upgrade in its growth forecast for 2026 to 1%, the BCC expects a diminishing contribution from investment.
Economists predict that business investment will contract by 0.2% this year before recovering to 0.4% growth next year. The unemployment rate is projected to end 2026 at 5%, while inflation is forecast to peak at 3.6%, exceeding Bank of England predictions. BCC chair Vicky Pryce stated that growth in the first two quarters of the year would soon be a distant memory as the economy continues in the slow lane.
The BCC predicts that the UK economy will contract in the third quarter and expand by just 0.1% between October and December. The BCC's more pessimistic forecasts for lower growth are in contrast to those of City firms and independent organizations. Economists anticipate government consumption to increase by about 2% in 2026. Historical growth patterns since 2022 suggest a common slowdown trend, with growth judgments becoming crucial ahead of the Budget revision of forecasts by the Office for Budget Responsibility. The Treasury has been asked for a response.
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