CBI warns Britain faces deeper recession and ‘lost decade’ of growth unless Rishi Sunak gets ‘serious’ and acts NOW to boost investment in UK
- CBI has downgraded growth forecasts and warned inflation will stay high longer
- Business group urged Rishi Sunak to take need to boost investment ‘seriously’
- Director general Tony Danker said firms were struggling to plan for the future
Britain faces a deeper recession and lost decade of growth unless Rishi Sunak acts now to boost investment, business chiefs warned today.
The CBI delivered the stark plea for the PM to treat the danger ‘seriously’ as it sharply downgraded estimates for UK plc.
GDP is seen as shrinking by 0.4 per cent next year, compared to previous predictions of 1 per cent growth from June. Inflation is also expected to stay higher for longer.
Director general Tony Danker said the UK must ‘start taking action’ on investment if it is going to avoid a recession that is ‘longer and deeper than it needs to be’.
He warned most businesses are going into 2023 ‘not really sure what to do’, thinking ‘there may be some growth left in the economy’ but ‘all the headwinds’ are telling them they should ‘plan for recession’.
CBI director general Tony Danker (left) said Rishi Sunak (right) must ‘start taking action’ on investment if it is going to avoid a recession that is ‘longer and deeper than it needs to be’
GDP is seen as shrinking by 0.4 per cent next year, compared to previous predictions of 1 per cent growth. Inflation is also expected to stay higher for longer
He told BBC Radio 4’s Today programme: ‘If we’re going to avoid this recession being longer and deeper than it needs to be, then we need to start taking action the Prime Minister himself recommended earlier in the year.
‘We have to start to take these seriously… or we’re not going to change that pattern of low business investment.’
While inflation is thought to have peaked in October at 11.1 per cent, the CBI now believes it will still be 3.9 per cent at the end of 2023.
As a result, it predicted a ‘year-long decline’ in consumer spending, while investment from businesses will also fall to a point where it is 9 per cent below pre-pandemic levels at the end of 2024.
Meanwhile, the CBI’s lead economist Alpesh Paleja said longer-term weaknesses in productivity and business investment appeared to be ‘bedding in’.
The CBI also noted that demand for workers was showing ‘early signs’ of softening, suggesting businesses were putting a pause on hiring. As a result, it predicted unemployment would rise ‘modestly’ next year, peaking at around 5 per cent.
Mr Danker said: ‘Britain is in stagflation – with rocketing inflation, negative growth, falling productivity and business investment.
He added that firms were expected to pause investment next year and called on the Government to ‘use levers of growth’ to ensure a recession was ‘as short and shallow as possible.’
He said: ‘We will see a lost decade of growth if action isn’t taken… There’s no time to waste.’
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