The British Chambers of Commerce (BCC) has revised its forecast for the UK economy, projecting growth of 1.3 percent in 2025, slightly higher than the earlier estimate of 1.1 percent. The upgrade reflects stronger-than-expected performance in the first quarter of the year and the impact of government spending.
Growth is expected to slow to 1.2 percent in 2026 before recovering to 1.5 percent in 2027.
Despite the more optimistic outlook, business investment remains a weak point. The BCC now expects investment to expand by only 1.6 percent in 2025, down sharply from the 4.8 percent growth it had forecast previously. Modest improvements are anticipated in the following years, reaching 1.
9 percent in 2026 and 3.0 percent in 2027.
Exports are forecast to grow by 3.1 percent in 2025, helped by front-loaded trade activity ahead of new US tariffs. However, imports are set to rise faster, by 4.4 percent, leaving the UK with a persistent trade deficit. The shortfall is expected to stand at 1.3 percent of GDP in 2025, easing slightly to 0.7 percent in 2026 and 0.9 percent in 2027.
Inflation remains a concern, with consumer price inflation predicted at 3.7 percent by the end of 2025, easing to 2.5 percent in 2026 and 2.1 percent in 2027. Interest rates are expected to hold at 4 percent through 2025 before edging down to 3.5 percent in 2026.
While wage growth is forecast to outpace inflation, concerns remain about high borrowing costs, weak trade, and policy uncertainty. The BCC cautioned that without stronger long-term measures, the UK risks being locked into a period of subdued growth.
