UK to avoid recession - CBI
By Abigail Townsend
Date: Monday 12 Jun 2023
(Sharecast News) - The UK will avoid recession, the Confederation of British Industry forecast on Monday, boosted by an improving global outlook and falling wholesale energy prices.
Publishing its latest economic forecast, the trade body said the UK economy looked to have fared better than expected in the first half of the year, leaving it on track to avoid recession.
It is expected to grow by 0.4% in the current year and 1.8% in 2024, upgraded from the CBI's previous forecast for a 0.4% decline and growth of 1.6% respectively.
The CBI said "tailwinds to growth" had strengthened since its last forecast in December. It also said inflation was on track to ease further during the year, with food inflation in particular falling from 15.5% in 2023 to 4.4% in 2024.
However, it also sounded a note of caution, arguing that risks to its inflation forecast remain "very much to the upside", due to ongoing domestic price pressures and wage growth. It also expects the Bank of England to raise interest rates two more times, to reach 5% in August.
Rain Newton-Smith, CBI director general, said: "Business and consumers alike will be relieved that the UK economy has avoided recession and will re-enter growth territory in the second half.
"But firms want to see growth and productivity pick up pace."
Alpesh Paleja, lead economist, added: "Tailwinds to both the UK and global economies have firmed since the start of the year. Lower energy prices, China lifting Covid restrictions and easing supply chain disruption have all contributed to some resilience in activity at home.
"While encouraging, there's no getting away from the fact that this year will be another tough one for both businesses and households.
"It is also concerning that the UK is underperforming on many of the areas crucial to our long-term prosperity."
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