UK Economy to Slide Into Recession in 2023, Says CBI Report
The UK has been suffering from an economic crisis over the past several months. Annual inflation in the UK reached 11.1 percent in October.
On Monday, the Confederation of Business Industry forecast
that the UK's economy is on course to drop 0.4 percent in 2023 as inflation remains high and businesses put investment on hold.
"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 had previously forecast growth of 1.0 percent next year. Tony Danker added that there might be a lost decade of growth if no action is taken.
"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 the people we need, nor the productivity," he said.
According to the CBI's report, unemployment will rise modestly next year.
"The unemployment rate will peak at 5 percent in late 2023/early 2024 [from its present level of 3.6 percent], before falling back to 4.5 percent," the report said.
In October, annual inflation
in the UK reached 11.1 percent. In November, the Bank of England raised its interest rate by 75 basis points to 3 percent per annum - the largest single increase in 33 years. The regulator also said that the UK economy had entered a recession expected to last until the second half of 2024.
A worldwide increase in inflation began in mid-2021 for various reasons, including the COVID-19 pandemic and the Ukraine crisis.
Western countries and their allies have been facing a massive energy crisis and struggling to fill their gas reserves in time for the winter as a result of the sanctions it imposed on Russia for launching a military operation in Ukraine. The sanctions and the military operation resulted in significant disruptions to supply chains and a spike in energy prices worldwide. In the UK, the rocketing cost of living has hit millions of households.