UK financial development will “grind to a halt” this 12 months earlier than briefly falling into damaging territory, in accordance with the British Chambers of Commerce.
The enterprise group downgraded its 2022 development forecast from 3.6% to three.5%, and mentioned inflation would attain 10% within the final quarter – far increased than common wage rises.
Investment development expectations have additionally been slashed for this 12 months, from 3.5% to 1.8%, mentioned the BCC report.
The bleak outlook follows a warning from one of many world’s main financial authorities that Britain’s development subsequent 12 months will probably be worse than any G20 nation besides Russia.
There will probably be no GDP enlargement in any respect in 2023, in accordance with the OECD (Organisation for Economic Co-operation and Development).
The group mentioned the UK was threatened by rising rates of interest and taxes, in addition to the excessive inflation that is main surging petrol costs and power prices.
It’s an evaluation supported by the BCC.
Alex Veitch, the group’s director of coverage, mentioned “the headwinds facing the UK economy show little sign of reducing”.
“The war in Ukraine came just as the UK was beginning a COVID recovery, placing a further squeeze on business profitability,” he mentioned.
“The forecast drop in business investment is especially concerning.
“It is significant that pressing motion is taken right here, and we’re having constructive conversations with the federal government about its assessment of capital allowances and different insurance policies to incentivise enterprise funding.”
‘Stable and supportive’ policies needed
Mr Veitch said growth could also be hit by falling consumer spending, caused by wage increases lagging behind rising costs.
“We forecast that, if tendencies proceed, inflation will solely return to the Bank of England’s goal charge on the finish of 2024…” said the BCC policy chief – who called for “steady and supportive insurance policies” to help firms.
Shadow business secretary Jonathan Reynolds said Tory failure was “hampering British enterprise”.
“Labour would develop our financial system with our plan to purchase, make, and promote extra in Britain, our local weather funding pledge, and tax cuts for small companies now to get our financial system firing on all cylinders,” he said.
A Treasury spokesperson said the UK had the fastest growth in the G7 last year and that unemployment numbers were the lowest in nearly 50 years.
“While we won’t insulate the UK from world pressures fully, we now have a plan for development, and are supporting folks with the price of residing,” they said.
“Eight million of probably the most weak households will obtain at the very least £1,200 of direct funds this 12 months, with all households receiving £400. We’re additionally investing in capital, folks and concepts to spice up development and residing requirements within the years to come back.”
httpspercent3Apercent2Fpercent2Fnews.sky.compercent2Fstorypercent2Fuk-economic-growth-will-grind-to-a-halt-and-10-inflation-on-the-way-says-british-chambers-of-commerce-12630468
