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Buses drive past Liverpool Street station, in the financial district of London, UK, October 7, 2022. /CFP
Britain's economy is on course to shrink 0.4 percent next year as inflation remains high and companies put investment on hold, with gloomy implications for long-term growth, the Confederation of British Industry (CBI) forecast on Monday.
"Britain is in stagflation – with rocketing inflation, negative growth, falling productivity and business investment. Firms see potential growth opportunities but ... headwinds are causing them to pause investing in 2023," CBI Director-General Tony Danker said.
The CBI's forecast marks a sharp downgrade from its last forecast in June, when it predicted growth of 1.0 percent for 2023, and it does not expect the gross domestic product (GDP) to return to its pre-COVID level until mid-2024.
British inflation hit a 41-year high of 11.1 percent in October, sharply squeezing consumer demand, and the CBI predicts it will be slow to fall, averaging 6.7 percent next year and 2.9 percent in 2024.
The CBI expects business investment at the end of 2024 to be nine percent below its pre-pandemic level, and output per worker two percent lower.
To avoid this, the CBI called on the British government to make country's post-Brexit work visa system more flexible, end what it sees as an effective ban on constructing onshore wind turbines, and increase investment tax incentives.
"We will see a lost decade of growth if action isn't taken. GDP is a simple multiplier of two factors: people and their productivity. But we don't have people we need, nor the productivity," Danker said.
(Source: Reuters with edits)
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