CBI downgrades forecast and warns of recession
13 Jun 2022
The government must take 'vital action' to avoid a recession after the forecast for economic growth was downgraded, warns the Confederation of British Industry (CBI).
The business group says that with the cost-of-living crunch shows no sign of abating and amidst continued battles with the EU over the Northern Ireland Protocol there is a real risk that the economy stays a 'distant second to politics' this summer.
The CBI's outlook suggests growth will soften as household spending turns downwards amid dented business and consumer confidence. As a result, the CBI has downgraded its GDP growth outlook significantly to 3.7% in 2022 and 1.0% in 2023.
High inflation is the primary source of weaker growth. CPI inflation reached a 40-year high in April (9%), driven higher by a cocktail of challenges – ranging from supply chain pressures to rising commodity prices and the war in Ukraine.
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.
'There is only a small window until recess. Inaction this summer would set in stone a stagnant economy in 2023, with recession a very live concern.
'We need to act now to install confidence. This can wait no longer.'