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Economists have warned the Government that British businesses cannot survive another year of stagnation, as figures pointed to a bleak start for the economy in 2026.
The Confederation of British Industry (CBI) urged Labour to get on with delivering growth after its latest survey concluded that 2025 had been a 'disappointing year'.
The survey revealed that despite the Budget bringing an end to months of uncertainty, prospects remain dismal, with firms pointing to a 'broad-based' downturn across the economy.
CBI deputy chief economist Alpesh Paleja said: 'Our latest surveys round off a disappointing year for private sector growth. They mark a continuation of the headwinds that have plagued businesses over the past 12 months: tepid demand conditions, with households cautious around spending and strong cost pressures squeezing margins.
'Uncertainty ahead of November's Budget also put the brakes on key spending decisions and big projects, choking up pipelines of work.
'Business can't face another year of stasis, and will be looking for the Government to expedite delivery in 2026.'
CBI's Growth Indicator figures showed activity shrank over the three months to December and is expected to decline again over the next three months.
That extends a run of dreary sentiment that goes back to Rachel Reeves' first Budget in October 2024. Back then, the Chancellor battered businesses with a £25billion raid on employer National Insurance contributions. Firms are also being squeezed by sharp increases in the minimum wage, botched business rates reform, and new workers' rights that will add to costs.
The CBI survey adds to a series of recent grim economic indicators.
Latest figures showed that gross domestic product has been shrinking – despite Labour's claim to making growth the Government's number one priority – and unemployment has hit 5.1 per cent, the highest rate in nearly five years.
Meanwhile, inflation at 3.2 per cent remains well above the Bank of England's 2 per cent target.
And figures last week showed retail sales fell for two months in a row, in October and November, with data suggesting the high street gloom will have continued this month and likely drag on into the new year.
The Confederation of British Industry has warned that UK businesses cannot survive another year of stagnation (stock)
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