US EditionUK growth to slow and business investment to contract amid tax hikes – report
The EY Item Club predicts UK GDP growth will slow to 0.9% and business investment will decline by 0.2% in 2026 due to tax rises, spending cuts, and global uncertainty.
- On Thursday, the EY Item Club's latest quarterly forecast showed UK GDP pulling back to 0.9% in 2026, a sharp slowdown from 2025's 1.4% outlook ahead of the Bank of England decision.
- Amid ongoing fiscal tightening, tax rises and spending cuts are expected to continue weighing on growth, while previously announced revenue measures will help the Government reduce borrowing next year.
- Business investment is set to contract 0.2% in 2026, reversing the 0.8% growth forecast in November while modest consumer spending growth continues this year and next.
- Households face a small boost to homeowners and businesses but rising unemployment and a wide confidence gap between high and low earners will slow real income growth.
- Ahead of Thursday's meeting, the EY Item Club forecasts one further rate cut in April as inflation eases toward 2%, with many budget measures taking effect over the next year or so.
7 Articles
7 Articles
GDP set to soften in 2026 as tax hikes bite
The UK is set for another year of soggy growth, according to new forecasts from EY, with the government’s tax hikes and ongoing worries about a global trade war hamstringing momentum. The Big Four firm predicted that GDP would rise 0.9 per cent in 2026, slower than the 1.4 per cent recorded last year, as the impact of last year’s Budget filters through the economy. “Further tax rises may not be expected in 2026, but previously announced measur…
Investment will stall and UK growth will slow amid Reeve’s tax hikes - London Business News
The latest quarterly economic forecast from the EY Item Club report shows that the government’s tax hikes and spending cuts will slow the UK’s economic growth this year. The economic… The post Investment will stall and UK growth will slow amid Reeve’s tax hikes appeared first on London Business News
UK unemployment set to hit five-year high as tax rises begin to bite, EY warns – Your Capital Minds
UK unemployment is expected to rise to its highest level in five years in 2026 as previously announced tax increases begin to weigh on growth and hiring, according to new forecasts from the EY Item Club. The forecasters warned that joblessness could peak at 5.2 per cent in the first half of this year, up from the current 5.1 per cent and the highest level since January 2021, as modest economic growth is constrained by tighter fiscal policy and g…
UK unemployment set to hit five-year high as tax rises begin to bite, EY warns
UK unemployment is expected to rise to its highest level in five years in 2026 as previously announced tax increases begin to weigh on growth and hiring, according to new forecasts from the EY Item Club. The forecasters warned that joblessness could peak at 5.2 per cent in the first half of this year, up from the current 5.1 per cent and the highest level since January 2021, as modest economic growth is constrained by tighter fiscal policy and g…
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