A leading business group has called for the prime minister and chancellor to take “vital actions” to avoid a recession after it downgraded its outlook for economic growth in the UK.
The CBI warned there was a risk that the economy would be a “distant second” to politics in the coming months because of the cost of living crisis, airports struggling to cope, planned national rail strikes and “Groundhog Day” battles with the EU over the Northern Ireland Protocol.
It said with fewer than 40 days until parliament goes into its summer recess, the countdown is on for action to be taken.
The CBI has downgraded its growth outlook to 3.7% for this year, from 5.1% previously, and just 1% in 2023, from 3%.
It said it believes inflation is expected to remain high into the autumn, rising to 8.7% in October, leading to a “historic squeeze” in household incomes, which will hit consumer spending.
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.
“It’s as clear as day that business investment is one of the few bright spots left in our economy.
“We’ve had weeks of politicking with the country standing on the brink of a summer of gridlock.
“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.”
The CBI called for measures including steps to alleviate labour and skills shortages.