The outlook of British economic growth will remain subdued in 2026 as the Budget released in late November is unlikely to kickstart the economy, a forecast from the British Chambers of Commerce (BCC) has shown.

The country's GDP is expected to expand 1.2 percent next year, lower than the 1.4-percent growth in 2025, according to the forecast released on Wednesday.

It projected business investment to suffer significantly, falling from expected growth of 3 percent in 2025 to only 0.9 percent in 2026, due to ongoing cost pressures on firms and the lack of direct growth measures in the Budget.

BCC also forecast slower UK trade growth next year amid continuous global trade uncertainty, falling from 3 percent this year to 1.8 percent in 2026, while the expansion of import is projected to slow from 3.8 percent to 1.4 percent, it said.

Average earnings are expected to continue easing next year, while unemployment rate rising to 5.1 percent as the labor market continues to loosen. Firms will continue to face ongoing costs pressure, sluggish productivity and low output limiting recruitment appetite.

But the cooling of wage growth and a softening labor market will continue to ease the inflation, said the BCC.

The forecast paints a picture of an economy remaining stuck in low gear, said David Bharier, head of research at the BCC, adding that the UK is trapped in a low growth cycle, with consequences for both the fiscal and political landscape.

"The outlook for small- and medium-sized enterprises in 2026 will continue to be challenging with business investment and export growth struggling. Inflationary pressures, specifically from rising labor and energy costs, are likely to persist, meaning only modest cuts in the interest rate," he added.

Vicky Pryce, chair of the BCC Economic Advisory Council, commented that businesses will be steering through choppy waters once again next year after a Budget that lacked the growth measures so desperately needed.

"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," she said.