UK economy to shrink in 2023, risks ‘lost decade’ – CBI

In its latest forecasts on the UK economy, the Confederation of Business Industry (CBI) said on Monday, they see Britain entering a year-long recession in 2023 amid high inflation and falling business investment.

Key takeaways

“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.”

“Britain’s economy is on course to shrink 0.4% next year, marking a sharp downgrade from its last forecast in June, when it predicted growth of 1.0% for 2023.”

“CBI predicts inflation will be slow to fall, averaging 6.7% next year and 2.9% in 2024.”

“The CBI forecast business investment at the end of 2024 will be 9% below its pre-pandemic level, and output per worker 2% lower.”

Market reaction

GBP/USD is little affected by the CBI’s gloomy economic outlook, trading 0.32% higher on the day at 1.2325.