A slump in business investment is anticipated to hinder the UK economy's potential for growth for the rest of the year, according to the British Chambers of Commerce (BCC). The industry group has warned that the economy is set for a slowdown in momentum over the remaining two quarters of 2026.
Economists predict that business investment will contract by 0.2 per cent this year, before recovering to 0.4 per cent growth in 2027. This is a revision from the BCC's previous forecast of a 2.2 per cent contraction.
The BCC also forecasts that the UK economy will contract in the third quarter of 2026 and expand by just 0.1 per cent between October and December. This outlook is more pessimistic than the average of independent forecasts surveyed by the Treasury, which anticipate 0.2 per cent growth in Q3 and 0.1 per cent in Q4.
The outlook for the UK jobs market is also described as bleak, with the unemployment rate expected to end 2026 at five per cent. Inflation is projected to peak at 3.6 per cent by the end of the year, exceeding Bank of England forecasts.