UK Economy to Shrink 0.4% in 2023, Risks ‘Lost Decade’: CBI

(CTN News) – According to a grim prediction made by the Confederation of Business Industry on Monday, UK’s GDP would contract 0.4% next year as a result of rising prices and corporations delaying investment.

“With skyrocketing prices, zero GDP, declining productivity, and decreased corporate investment, UK is experiencing stagflation.

Although businesses see prospects for prospective development, headwinds will prevent them from investing in 2023 “Tony Danker, director general of the CBI, stated.

The gross domestic product (GDP) is not expected to reach its pre-COVID level until mid-2024, according to the CBI’s prediction, which is a dramatic reduction from its previous forecast from June, when it forecasted growth of 1.0% for 2023.

A rise in natural gas costs after Russia’s invasion of Ukraine, an inadequate labour market recovery following the COVID-19 epidemic, and consistently low investment and productivity have all had a significant negative impact on UK.

According to the CBI, unemployment would increase from its present level of 3.6% to a high of 5.0% in late 2023 and early 2024.

Consumer demand in UK was severely curtailed by inflation in October, which reached a 41-year high of 11.1%. The CBI forecasts that inflation will continue to rise slowly, averaging 6.7% next year and 2.9% in 2024.

Russia’s economy will do worse than UK’s in Europe next year

The Office for Budget Responsibility of the British government, which estimated a 1.4% fall for 2023 last month, is more pessimistic than the CBI.

The Organisation for Economic Co-operation and Development (OECD), however, predicts that Russia’s economy would do worse than UK’s in Europe next year, which is consistent with the CBI’s prediction.

Business investment, according to the CBI, is expected to be 9% lower than it was before the epidemic, and production per worker will be 2% lower.

The CBI urged the government to abolish what it regards as an ineffective prohibition on building onshore wind turbines, increase tax incentives for investment, and make UK’s post-Brexit work visa system more flexible in order to prevent this.

“If nothing is done, the next ten years of progress will be gone. People and their production are simply multiplied by each other to produce GDP. However, we lack the necessary personnel, productivity, “Added Danker.

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