CBI slashes UK growth forecasts
By Abigail Townsend
Date: Monday 13 Jun 2022
(Sharecast News) - The Confederation of British Industry slashed its growth forecasts for the British economy on Monday, and warned that the country was now at risk of recession.
The employers' organisation now expects GDP to grow by 3.7% in 2022, down from its previous guidance for 5.1% growth. In 2023, GDP is expected to improve by 1.0%, compared to an earlier forecast for 3.0%.
The CBI said high inflation was the primary reason for the downgrade after it reached a 40-year high of 9% in April. The Bank of England expects consumer price inflation to surpass 10% by the end of the year.
It also predicted real household incomes would fall at the fastest pace since records began in the 1950s, by 2.3% over the year. Unemployment is also likely to edge upwards, the CBI said, with the rate reaching 4.1% from its current level of 3.7% by the end of 2023.
Tony Danker, CBI director-general, said: "We're expecting the economy to be pretty stagnant - it won't take much to tip us into recession. And even if we don't, if will feel like one for too many people.
"We've had weeks of politicking, with the country standing on the brink of a summer of deadlock. There is only a small window until [Parliament goes into] recess. Inaction this summer would set in stone a stagnant economy in 2023, with recession a very live concern."
Rain Newton-Smith, CBI chief economist, said: "War in Ukraine, a global pandemic, continued strains on supply chains, all preceded by Brexit, have proved to be a toxic recipe for UK growth. The bottom line is that the outlook for UK exports remains far worse than worldwide competitors.
"Business and government must work together to see growth globally."
Despite the uncertain economic environment, the CBI expects business investment to continue growing until mid-2023. But it then expects investment to fall away as the super-deduction tax break comes to an end.
Worldwide, and the CBI predicted GDP growth would be 3.1% this year and 3.4% in 2023, down on its last forecast, for growth of 4.7% and 3.8% respectively.
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