UK gross domestic product (GDP) growth for 2025 is expected to shift slightly higher to 1.4 per cent, up from 1.3 per cent previously, largely driven by public spending, according to the British Chambers of Commerce (BCC). However, GDP growth expectations for 2026 and 2027 remain unchanged at 1.2 per cent and 1.5 per cent respectively, reflecting persistent productivity challenges and cautious fiscal tightening.

The last month’s budget is unlikely to kickstart economic growth, with the first major post-budget forecast from a leading business body pointing to a subdued outlook. The growth prospects remain modest despite a marginal upward revision for 2025, BCC said in its latest economic forecast.

UK GDP growth for 2025 is forecast to edge up to 1.4 per cent, driven by public spending, according to the British Chambers of Commerce.
Last month’s Budget is unlikely to revive the economy.
Growth in 2026 and 2027 remains subdued, with weak business investment, slowing exports, and rising unemployment.
Inflation is easing, but only modest interest rate cuts are expected.

In 2026, manufacturing growth is forecast at 0.9 per cent, and by 2027, growth is projected to improve to 1.8 per cent in manufacturing.

Business investment is expected to weaken sharply next year. After an estimated rise of 3 per cent in 2025, investment growth is forecast to slow to just 0.9 per cent in 2026, before recovering modestly to 1.5 per cent in 2027. The BCC attributed the weakness to sustained cost pressures on firms and the absence of direct growth-boosting measures in the budget.

Exports are forecast to rise by 1.8 per cent in 2026 and 2.4 per cent in 2027, sharply lower than earlier expectations of 3.3 per cent and 3.2 per cent. Imports are projected to grow by 3.8 per cent this year, before easing to 1.4 per cent in 2026 and then rising to 2.8 per cent in 2027.

Inflation is forecast to continue easing, with consumer price inflation expected to fall to 2.1 per cent by the end of 2026 and reach the Bank of England’s 2 per cent target by the fourth quarter of 2027. Average earnings growth is also expected to cool, from 4.3 per cent by the end of this year to 3.8 per cent in 2026 and 3.5 per cent in 2027.

With inflation easing but growth remaining weak, interest rate cuts are expected to be limited. The BCC forecast sees the policy rate at 3.75 per cent by the end of this year, falling only slightly to 3.5 per cent by December 2026.

Unemployment is projected to rise further, reaching 5.1 per cent in 2026 as labour market conditions loosen and firms rein in hiring amid cost pressures and sluggish productivity. The rate is then expected to ease to 4.8 per cent in 2027.

“Our forecast suggests last month’s Budget is unlikely to be a growth game-changer for the UK economy,” said David Bharier, head of research at the BCC. “The outlook for SMEs in 2026 will continue to be challenging with business investment and export growth struggling. Inflationary pressures, specifically from rising labour and energy costs, are likely to persist, meaning only modest cuts in the interest rate. Unemployment will be a key indicator to track as labour costs rise and automation costs ease.”

“Taken together the forecast paints a picture of an economy remaining stuck in low gear. Businesses are showing remarkable resilience and innovation, but many are weighed down by political uncertainty and the cumulative cost pressures,” added Bharier. “Delivery on growth is now key—the government has published industrial, trade, and infrastructure strategies, and these must translate into action. The UK is trapped in a low growth cycle, with consequences for both the fiscal and political landscape. Maximising the AI roll-out and global trading opportunities could help break the deadlock.”

“Businesses will be steering through choppy waters once again next year after a Budget that lacked the growth measures so desperately needed,” said Vicky Pryce, chair of the BCC economic advisory council. “Getting inflation back down towards the Bank’s 2 per cent target is good news, but that masks the continuing cost pressures for businesses. Significant interest rate cuts, that would make a huge difference to businesses and households, are not guaranteed next year by any means.

“Rising unemployment will be a key part of the economic landscape next year, pushing down consumer spending and presenting further challenges for firms of all sizes,” added Pryce.

Fibre2Fashion News Desk (SG)

Despite making strides in sustainability, India’s textile sector faces critical challenges in energy and waste management, according to a new report by the ICRA ESG Ratings Limited.

Seventy-four per cent of top textile firms in the country adopted zero liquid discharge (ZLD) processes in fiscal 2024-25 (FY25), led by integrated players, while the industry’s waste recycling rate improved from 77 per cent in FY23 to 80 per cent in FY25, though waste generation rose by nearly 19 per cent.

Despite making strides in sustainability, India’s textile sector faces critical challenges in energy and waste management, according to a new report by the ICRA ESG Ratings Limited.
Both water and waste usage trends point towards the need for strengthening circularity in resource use.
The apparel, yarn and fabric segments are making gradual progress towards formal ESG governance frameworks.

Both water and waste usage trends point towards the need for strengthening circularity in resource use.

Maturing governance systems across the textile sector companies is another positive development. Fifty-seven per cent of integrated companies have environmental and social governance (ESG) committees; 71 per cent have set emission reduction targets.

The apparel, yarn and fabric segments are making gradual progress towards formal ESG governance frameworks.

However, challenges persist. Energy intensity remains high, particularly in the yarn and fabric segment, with renewable energy share being only 8 per cent in FY25, highlighting urgent need for decarbonisation, a release from the company said.

Only 21 per cent of companies disclose value chain emissions, indicating early-stage supply chain inclusion.

As global frameworks like the European Green Deal and the EU Carbon Border Adjustment Mechanism sharpen focus on carbon-heavy industries, Indian textiles must accelerate decarbonisation and circularity to maintain competitiveness, the company added.

“The transition is under way, but the pace must quicken. Targeted tech investments and collaborative frameworks are key for long-term resilience,” ICRA ESG chief ratings officer Sheetal Sharad said.

Fibre2Fashion News Desk (DS)

Chanel has tapped the human resources chief from Dutch insurer Aegon as the fashion and beauty company continues to reshuffle its top executive roles.

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Elisabetta Caldera, 55, has been named global chief people and organization officer for Chanel Ltd., succeeding Claire Isnard, 64, starting next month, the company told Bloomberg News in a statement.

Isnard is retiring after more than 17 years at the group, which had a workforce of around 38,400 employees last year. Caldera will join Chanel’s leadership team, reporting to Chief Executive Officer Leena Nair, and be based in London.

Caldera spent more than four years as global chief human resources officer at Aegon Ltd. where she was also part of the insurer’s executive committee. The Italian executive previously spent 17 years at Vodafone Group Plc in various HR roles until 2021 when she joined Aegon. 

Under CEO Nair, the former head of HR at Unilever Plc, Chanel has been rebuilding the roster of top managers at the company as an older guard retires.

Chanel, known for its No. 5 fragrance, is privately owned by the billionaire brothers Alain and Gerard Wertheimer whose fortunes are estimated at about $43 billion each, according to the Bloomberg Billionaires Index.

The company, founded in Paris but headquartered in London, reports its financial performance once a year, generally around late May. Revenue fell 4.3% to $18.7 billion in 2024 on a comparative basis with operating profit sliding by almost a third partly due to heavy advertising spending and a rise in hiring.