Britain risks ‘a lost decade of growth’ as stagflation hits: Business leaders warn action is needed as forecasts are revised downwards
Business leaders have warned that action is needed to avoid a “lost decade of growth” as forecasts were revised sharply downwards.
The Confederation of British Industry (CBI) estimates Britain’s gross domestic product will contract by 0.4 percent next year, down from forecasts of 1 percent growth.
While inflation was expected to have peaked at 11.1 percent in October, the CBI estimated it will still be 3.9 percent at the end of 2023. of companies will also decline to a point where it will be 9 percent below pre-pandemic levels by the end of 2024.
Hard hit: CBI said longer-term weaknesses appeared to be ’embedding’ in productivity and business investment
“Britain is in stagflation – with skyrocketing inflation, negative growth, falling productivity and business investment,” said CBI director-general Tony Danker.
He added that companies were expected to halt investment next year and called on the government to use “growth levers” to ensure that a recession would be “as short and superficial as possible”.
He said: ‘We will have a lost decade of growth if no action is taken… There is no time to lose.’
Meanwhile, CBI chief economist Alpesh Paleja said longer-term weaknesses in productivity and corporate investment seemed to be “working in.”
The CBI also noted that demand for workers showed “early signs” of weakening, suggesting companies are pausing hiring. As a result, it predicted unemployment would rise “modestly” next year, peaking at around 5 percent.