The UK economy is facing a challenging outlook for 2026, with growth expected to fall below 1 % amid rising taxes and a sharp fall in business investment. According to EY Item Club and the Office for Budget Responsibility (OBR), investment growth is projected to collapse from 3.7 % this year to just 0.8 % next year, dragging GDP growth down to around 0.9 %.
Meanwhile, a separate forecast from EY lifts 2025 growth to 1.5 % thanks to strong public-spending support, but warns that tighter fiscal policy, tax hikes and global headwinds will curb progress beyond that.
Business confidence is at a record low, with firms citing uncertainty over regulation and weaker investment.
