UK unemployment set to jump as economic growth forecast slashed | UK | News
Britain’s economic growth looks set to stall and unemployment is predicted to worsen as ongoing conflict in the Middle East and rising energy costs wreak havoc on households and businesses, according to new forecasts.
Influential business group the Confederation of British Industry (CBI) has warned that nearly 200,000 more Britons are on track to lose their jobs, painting a bleak picture of the country’s economic prospects.
Its latest economic forecast predicted that unemployment in the UK would rise to 5.5% this year, representing around two million people.
The unemployment rate was last reported by the Office for National Statistics as 5%, or around 1.8 million people.
CBI economists attributed the weakening job market to a decline in business investment due to persistently high cost inflation and growing concerns about consumer spending.
Unemployment is predicted to drop to around 5.3% by 2027.
This comes as the organization also scaled back its growth forecasts for the next two years.
Forecasts have predicted that the UK’s gross domestic product (GDP) will slow from 1.4% growth last year to 1.1% in 2026 and then 0.9% in 2027.
Previously, a growth rate of 1.3 percent this year and 1.5 percent in 2027 was targeted.
This gloomy outlook is largely attributed to the consequences of the Middle East conflict, which has pushed inflation beyond expectations and shaken confidence among both businesses and consumers. Rising global energy prices, disrupted supply chains and increasing uncertainty are expected to hinder growth.
CBI chief economist Louise Hellem said: “What is happening around the world further reinforces the UK’s low growth story.
“We saw a weak momentum throughout 2025, but if it were not for the recent global shocks, we would be having much more positive conversations about the economy today.
“Last year there were tariffs, and this year it’s the conflict in the Middle East.”
Forecasts also suggested inflation would rise “towards 4 per cent” by the end of this year as rising energy costs hit both businesses and households.
UK consumer price index (CPI) inflation stood at 2.8% in April but is expected to accelerate in the coming months.
The CBI said it expects the Bank of England to keep interest rates at their current level of 3.75% for the rest of this year.
