UK exports forecast downgraded as Labour fails to kickstart trade

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LONDON, ENGLAND - OCTOBER 11: A general view of aircraft at Heathrow Airport in front of the London skyline on October 11, 2016 in London, England. The UK government has said it will announce a decision on airport expansion soon. Proposals include either a third runway at Heathrow, an extension of a runway at the airport or a new runway at Gatwick Airport. (Photo by Jack Taylor/Getty Images)

British export growth will fall by almost half next year, a business forecaster has said, with Labour’s string of deals failing to improve hopes of a revival in international trade.

The Labour government has made trade a key lever to boost growth prospects, using new deals with the likes of the EU and India to boost market opportunities for business leaders in the UK.

But export growth is expected to fall from around three per cent this year to 1.8 per cent in 2026, according to economists at the British Chambers of Commerce (BCC).

The new forecast is a significant reduction from a previous 3.3 per cent prediction.

With business confidence at a historical low ahead of last month’s Budget, the latest BCC forecast has suggested Rachel Reeves’ interventions will fail to reverse this decline.

The industry group’s top researcher David Bharier said the assessment showed the economy was “stuck in low gear,” with the Chancellor offering businesses little to soothe market uncertainty and cost pressures. 

The BCC pushed up its GDP growth forecast for 2025 by just 0.1 percentage point to 1.4 per cent in recognition of strong public spending over the first half of the year, while estimates for 2026 and 2027 remained unchanged at 1.2 and 1.5 per cent. 

In further signs that the UK’s economic outlook remained subdued, growth in business investment is expected to fall dramatically next year from estimated 3 per cent growth this year to just 0.9 per cent in 2026, before rising slightly to 1.5 per cent in 2027.

Trade tremors

Recent official data showed that the the value of goods exports fell by £1.7bn in September, with exports dropping to both the EU and non-EU cuntries.

Exports of goods to the US fell by 11.4 per cent, or £500m, with President Trump’s brutal tariffs beginning to weigh on growth in the UK economy in real time.

The BCC said net trade would continue to contract, falling by 0.9 per cent this year and next, although imports are expected to rise by 3.8 per cent this year. 

Bharier said small and medium businesses will continue to struggle next year, warning rising labour and energy costs could push up the unemployment rate as firms opt to automate operations rather than hire more workers.

“Our forecast suggests last month’s Budget is unlikely to be a growth game-changer for the UK economy,” he said.

“Businesses are showing remarkable resilience and innovation, but many are weighed down by political uncertainty and the cumulative cost pressures.  

“Delivery on growth is now key – the government has published industrial, trade, and infrastructure strategies, and these must translate into action.”

The government signed a string of trade deals this year – with India, the US, and the EU – but LSE has warned these agreements will do little to boost the UK economy. 

Nearly half of UK businesses are looking to expand abroad to escape uncertain growth prospects at home, according to a .

Vicky Pryce, chair of the BBC’s economic advisory council, said: “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.” 

Pryce said inflation falling back to the Bank of England’s two per cent target is one encouraging piece of data for the country as she called on the Bank to slash interest rates to boost business.