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The Confederation of British Industry (CBI) has warned that US tariffs and higher costs for businesses the UK economy will grow at a reduced rate of 1.2% this year and 1.6% as previously predicted.
As the government is trying to accelerate economic growth increased costs is going to create “week” business investment.
The CBI has downgraded their growth forecast from 1.5% to 1% for 2026. US tariffs has caused headwinds in the US which has slowed down investment for businesses in the UK.
Louise Hellem, chief economist at the CBI, said: “Our latest economic forecast underlines the challenges facing businesses and the wider economy as they’re buffeted by domestic and global headwinds.
“The unpredictable global outlook combined with rising employment costs, gloomy business sentiment, and subdued investment intentions means it’s more important than ever that government pulls all the levers it can to set the UK on a path to sustainable growth.
“With GDP (gross domestic product) set to remain modest in 2026, there is an important opportunity for the government to fire up the growth agenda in the forthcoming Industrial Strategy.
“With the cumulative burden of increased costs being felt by firms across the economy, it is vital the Industrial Strategy helps drive a thriving environment for all businesses.”
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