The Building Cost Information Service (BCIS) is the leading provider of cost and carbon data to the UK built environment. Over 4,000 subscribing consultants, clients and contractors use BCIS products to control costs, manage budgets, mitigate risk and improve project performance. If you would like to speak with the team call us +44 0330 341 1000, email contactbcis@bcis.co.uk or fill in our demonstration form
Published: 20/08/2026
Growth predictions for UK economy in 2026 rise slightly to 1.1%
Independent economic forecasts received by HM Treasury in August point to a modest improvement in the outlook for UK economic growth in 2026(1).
The average of new independent forecasts indicates UK GDP growth of 1.1% in 2026, up slightly from 1.0% in July. Expectations for 2027 have also improved with growth forecast at 1.2%.
By comparison, GDP growth averaged closer to 2% through much of the 2010s. Since the pandemic, growth has settled nearer to 1% per year, reflecting the UK’s weaker post-COVID recovery.
Source: HM Treasury – Forecasts for the UK economy: August 2026
Dr Crosthwaite, chief economist at BCIS, said: ‘August’s forecasts represent an improvement on those received in July, but the underlying outlook remains one of subdued growth. Much will depend on the government’s approach in the Autumn Budget, particularly how tax and spending decisions affect business confidence and investment.
‘For construction, the environment remains challenging. We are likely to see some hesitation around investment and decision making in the run up to the Budget, as we did last year, potentially amplified by the current geopolitical situation.’
The forecasts published by the Treasury also suggest CPI inflation will average 3.4% in 4Q2026, unchanged from the previous month, before easing to 2.2% annual inflation by the final quarter of 2027, down from 2.3% in July’s forecast.
Source: HM Treasury – Forecasts for the UK economy: August 2026
Dr Crosthwaite added: ‘The increase in wider inflation in July adds another layer of pressure. More persistent inflation reduces the scope for further cuts to Bank Rate, keeping borrowing and financing costs elevated for longer. For construction, that matters because higher financing costs can directly affect project viability, investment decisions and the pace at which schemes move through development. Combined with subdued economic growth, this is likely to reinforce a cautious approach among clients and investors.’
To keep up to date with the latest industry news and insights from BCIS, register for our newsletter here.
(1) HM Treasury – Forecast for the UK economy - here
