16 Dec 2025The latest economic forecast from the Confederation of British Industry (CBI) has warned that 'underlying weaknesses' are holding the UK economy back. According to the business group, firms are 'swimming against the powerful tides' of weak demand, elevated labour and energy costs and ongoing domestic and global uncertainty. However, the CBI has upgraded its growth projection for 2026 from 1.0% to 1.3%. It said that the upward revision was driven largely by a temporary boost to government expenditure after the Autumn Budget. Commenting on the forecast, Louise Hellem, Chief Economist at the CBI, said: 'The forecast shows that the UK economy is continuing to face significant and persistent headwinds. Demand is fragile, domestic and global uncertainty is keeping a lid on business investment and the cumulative burden of rising employment costs – from NLW and NICs hikes – is hitting firms' profits and hiring plans. 'With businesses facing these combined pressures, we're unlikely to achieve the jump in activity needed to lift the UK's long-term growth ceiling. While the Budget did deliver much needed stability, too many bold choices were left unaddressed.'