Has anything changed since April? I think it is getting worse, any thoughts?
The UK economy could be heading for a recession and the cost of living will rise even higher.
That’s the dire warning of a leading business group about the outlook for the country’s finances in the year ahead.
The CBI’s forecast came hours before official statistics confirmed the economy shrank again in April.
Office for National Statistics data revealed that gross domestic product fell by 0.3%, compared to a fall of 0.1% in March.
The impact of the winding down of the test and trace program on the health sector and the hit to manufacturing by rising energy prices were the primary drags on growth, the ONS said.
The CBI stopped short of firmly predicting a recession but said the economy would be hovering just above the line and could easily slump over it.
It downgraded its growth outlook to 3.7% for this year, from 5.1% previously, and just 1% in 2023, from 3%.
The CBI said it believes inflation is expected to remain high into the autumn, rising to 8.7% in October, leading to a ‘historic squeeze’ in household incomes, which will hit consumer spending.
Tony Danker, CBI director general, said: ‘Let me be clear – we’re expecting the economy to be pretty much stagnant.
‘It won’t take much to tip us into a recession, and even if we don’t, it will feel like one for too many people.
‘Times are tough for businesses dealing with rising costs, and for people on lower incomes concerned about paying bills and putting food on the table.’
The business leader said politicians have been guilty of ‘weeks of politicking with the country standing on the brink of a summer of gridlock’ and called for the government to take further action.
The CBI called for measures including steps to alleviate labor and skills shortages.
Rain Newton-Smith, the CBI chief economist, called the numbers ‘a tough set of statistics to stomach’.
He said the war in Ukraine, a global pandemic, and continued strains on supply chains are a ‘toxic recipe’ for growth when coupled with Brexit.
Mr. Newton-Smith continued: ‘Post-Brexit regulatory reforms to support growth, innovation, and sustainability can build competitiveness.
‘But divergence for the sake of it could introduce further red tape and friction undermining that mission.’
Environment secretary George Eustice said there are ‘some real challenges ahead’ but defended the government’s handling of the economy.
Comments
Post a Comment
Thank you for your comment