The British Chambers of Commerce (BCC) has downgraded the UK’s growth forecast for 2025, projecting GDP to expand by just 0.9 per cent, down from an earlier estimate of 1.3 per cent. The revision reflects increasing cost pressures on businesses, along with global economic uncertainties and persistent inflation.
The British Chambers of Commerce (BCC) has revised down the UK’s 2025 growth forecast to 0.9 per cent from 1.3 per cent, citing rising business costs and global uncertainties.
Inflation and interest rates are expected to remain high, while exports are forecast to contract.
BCC warns that increased National Insurance and wage costs may stall investment and impact workforce decisions.
Business investment is expected to remain weak as firms contend with the impact of National Insurance increases and a higher minimum wage. The forecast for business investment in 2025 has been reduced to 0.6 per cent from 0.9 per cent, though a recovery to 1.8 per cent is expected in 2026, the BCC said in a release.
Exports are also predicted to decline, with the BCC forecasting a 0.5 per cent contraction in 2025, compared to an earlier expectation of 0.2 per cent growth. Challenges in trading with the EU and broader global uncertainties continue to weigh on trade prospects. Imports are expected to remain flat this year before rising modestly in 2026.
David Bharier, head of research at the BCC, highlighted the mounting difficulties businesses are facing. “Our downgrade to the economic outlook is reflective of the severe pressures piling up on businesses right now. UK firms are facing a double whammy of rising domestic taxation and a potential global trade war. Businesses are telling us that the rise in National Insurance and the minimum wage will increase costs, stall investment, and cause them to rethink their workforce plans.”
Inflation is now expected to remain above the Bank of England’s target until late 2027, with the consumer price index (CPI) forecast at 2.8 per cent in Q4 2025, up from 2.2 per cent in the previous estimate. Meanwhile, interest rates are projected to remain higher for longer, with the base rate expected to be 4.25 per cent by the end of 2025 before falling to 4 per cent in 2026.
Vicky Pryce, chair of the BCC Economic Advisory Council, warned of a difficult year ahead. “This is going to be a long and challenging year for UK businesses. The BCC’s forecast shows an economy struggling without the secure foundations to kickstart business investment. Inflation will continue to be stubborn this year, forcing the Bank of England to keep interest rates relatively high. Global uncertainties will add further dark clouds to the economic climate.”
The BCC emphasised that businesses cannot wait for long-term government strategies and need immediate support to invest, recruit, and trade. While the AI boom could offer new opportunities, small businesses require assistance in adopting new technologies to remain competitive.
Fibre2Fashion News Desk (RKS)
