CBI: 200,000 more Brits to face unemployment this year

The UK economy is set for further pain in the months ahead, a top business group has warned, as consumers and businesses across the country suffer the effects of the Iran conflict, surging energy prices and a raft of government tax hikes.

The Confederation of British Industry (CBI) has said that around 200,000 more Brits are on track to become unemployed before the end of year, while growth will slow to as little as 0.9 per cent next year, in a damning economic prognosis.

Louise Hellem, chief economist at the CBI, said: “What’s happening around the world is compounding the UK’s low-growth story.

“We saw weak momentum throughout 2025, but if it weren’t for the latest global shocks, we could be having a much more positive conversation about the economy today.

“Last year it was tariffs and this year it’s the conflict in the Middle East.”

The CBI’s forecasts also indicated that inflation would continue to rise “towards 4 per cent” but cautioned that the Bank of England was unlikely to change interest rates later this year.

The business group also downgraded its GDP growth forecasts, with economic growth set to slow from 1.4 per cent last year to 1.1 per cent in 2026 and then just 0.9 per cent in 2027.

Previously, it had pointed towards growth of 1.3 per cent this year and 1.5 per cent in 2027.

The economic forecasts come after the CBI boss used a landmark speech to warn that the heavy business tax burden is nudging British firms towards a “tipping point”, directly linking the Labour government’s troubles to cost pressures on firms.  

At a speech at the organisation’s annual business dinner, chief executive Rain Newton-Smith slammed the government’s decision to add to an estimated £345bn business tax bill over the last two Budgets. 

Newton-Smith warned that decisions to raise national insurance contributions (NICs) for employers and forcing through minimum wage increases have not been “free of consequence”. 

She added that businesses are not a “cash tap” while hitting back at Labour MPs by saying that “you cannot tax your way to growth”. 

She said: “You cannot fix the cost of living without fixing the cost of doing business. And the cost of doing business is reaching a tipping point.”