LONDON, June 2 (Xinhua) -- Britain's economic growth is expected to remain subdued through 2026 and 2027 due to the fallout from the Middle East conflict, according to the latest economic forecast released Tuesday by the British Chambers of Commerce (BCC).
The BCC revised its forecast for gross domestic product growth in 2026 to 0.9 percent from 1 percent in the previous forecast, and predicted the economy to expand 1 percent in 2027 and 1.3 percent in 2028.
Citing the conflict as a major economic drag, the BCC said business investment is forecast to shrink sharply, contracting by 2.2 percent in 2026 and 0.1 percent in 2027 before recovering to grow 2.3 percent in 2028.
Consumer price inflation, measured by the Consumer Prices Index (CPI), is expected to rise again in the coming months after easing in April. Driven by energy and shipping cost hikes, inflation is expected to peak at 3.8 percent in the fourth quarter of this year before easing to 2.3 percent by the end of 2027, and further to 2 percent by the end of 2028, the BCC said.
This year's unemployment rate is forecast to rise to 5.2 percent and then reach 5.5 percent in 2027. Youth unemployment rate will hit 16.9 percent in 2026 and continue to climb to 17.8 percent in 2027.
"While the UK economy has shown some welcome resilience this year, the expected headline growth figure of 0.9 percent for 2026 masks underlying concerns," said David Bharier, deputy director of Economics and Insights at the BCC.
Britain's economy "remains trapped in a cycle where each recovery is interrupted before gaining traction, and firms go back on the defensive," he said, adding that high youth unemployment rate risks weakening the skills pipeline needed to support the country's future economy. ■