The Confederation of British Industry (CBI), an employers group, has said that Britain’s economy looks set to grow more slowly than previously thought this year and in 2023.
The lag is due to global supply chain problems, the group said, while tasking the government to encourage longer-term business investment.
The Confederation of British Industry cut its forecasts for economic growth to 6.9% in 2021 and 5.1% in 2022 from previous estimates of 8.2% and 6.1%.
It said the downgrade mostly reflected weaker growth since its last forecasts in June and the supply chain problems that have slowed the recovery from last year’s coronavirus slump were likely to end in mid-2022.
With exports still weak, household spending would drive 90% of growth next year and two-thirds of it in 2023 thanks to a strong jobs market and savings racked up during the pandemic.
Business investment looked set to grow by 8.2% next year and go above its pre-pandemic level but the bounce would probably prove short-lived with corporate investment falling back in mid-2023 when a tax incentive is due to expire.
The new forecasts from the group saw inflation peaking at 5.2% in April and remaining above the Bank of England’s 2% target for around another year while unemployment would fall to 3.8% by the end of 2023.
The CBI’s forecasts were made before the emergence of the Omicron variant of the coronavirus which has led to tighter COVID rules.
