UK Faces Recession and Lost Decade Without Growth Plan, CBI Says
FinanceDec 05, 2022
The UK’s economy is expected to shrink by 0.4% in 2023, the Confederation of Business Industry (CBI) forecast on Monday.
A combination of inflation and economic stagnation — known as stagflation — is the primary reason the business lobby group expects the UK economy to continue to contract. It believes the conditions could lead to a “lost decade of growth.”
While last month’s announcement of £55B in spending cuts was necessary to stabilize the economy, it won’t encourage growth. The government must stimulate investment with substantial tax breaks for businesses that spend domestically, bring the UK closer to the EU by finalizing a proper deal over Northern Ireland, and address the shrinking workforce. Only achieving this clear criteria will boost growth and avoid a severe economic downturn.
The government’s latest round of tax raises and spending cuts are a massive assault on low- and middle-income families. The UK economy has already been severely damaged by 12 years of austerity, the destruction of public services, unrestrained corporate profiteering resulting in a 14.2% rate of inflation, and labor shortages caused by Brexit and related xenophobia. The UK needs a new direction away from the continued assault on consumer, worker, and environmental protections.
There is a 50% chance that the UK's annual inflation rate will be at least 5.34% in 2023, according to the Metaculus prediction community.