The latest CBI forecast points to encouraging signs that the UK economy is on track to gradually pick up steam over 2024 and 2025. After a strong start to the year, momentum will continue with GDP growth in 2025 anticipated to reach 1.9%.
The economy has struggled in recent years under the pressures of economic shocks such as the COVID-19 pandemic and Ukraine war. GDP growth came in at only 0.1% over 2023, with the dual headwinds of high inflation and increased interest rates weighing on economic activity.
Louise Hellem, CBI Chief Economist, said: “It’s encouraging to see that the outlook for the UK economy is improving after a difficult 2023. However, we cannot afford to be complacent about our progress going forward. To ensure longer-term, sustainable growth, we must tackle our ongoing productivity problem.
“Our Business Manifesto sets out several policies to improve productivity and deliver prosperity through a positive vision for the UK economy. These include a cutting-edge trade and investment strategy, a Net Zero Investment Plan, and more support for firms to invest in AI – particularly where it can help in automation and super-charging productivity.
“Now in the midst of a General Election, political parties have an opportunity to prioritise the economy and unlock long-term, sustainable growth by using their manifestos to set out measures that will support business investment and propel growth for the next decade and beyond.”
The CBI’s latest UK Economic Forecast shows that:
- UK GDP growth is projected to rise to 1.0% in 2024.
- Momentum should continue in 2025, with GDP growth anticipated to reach 1.9% – broadly in line with the average pre-COVID growth rate (of 2.0% between 2010-19).
- Consumer spending is the main driver of growth, reflecting an improvement in households’ real incomes as inflation falls.
- Business investment is set to be weak in 2024 but will recover as GDP growth strengthens.
- However, productivity remains below its pre-COVID trend, signalling further action is needed to spur longer-term, sustainable growth.
