CBI cuts UK economic growth forecast for 2025 to 1.2%

The Confederation of British Industry (CBI) has slashed its UK growth forecasts for the next two years. The business group now expects the economy to expand by just 1.2% in 2025, down from its earlier 1.6% projection, while the 2026 estimate has been cut to just 1%, compared to the earlier forecast of 1.5%.

The downward revision was primarily driven by the increase in payroll taxes and the imposition of trade tariffs by US President Donald Trump. The April hike in National Insurance contributions and higher minimum wages are putting pressure on businesses, forcing many to cut hiring and investment. The organization also warned that Trump’s duties, which target a wide range of goods, despite the special US-UK trade deal, will further dampen economic activity.

According to CBI Chief Economist Louise Hellem, the challenging global economic climate coupled with rising labor costs demands proactive government measures to safeguard sustainable economic growth.

Adding to the pressure, the Bank of England is expected to gradually cut its benchmark interest rate to 3.5% by late 2025, down from today's 4.25%, according to CBI projections.