UK Economy to Shrink in 2023 – CBI.

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Britain’s economy is on course to shrink 0. 4% in 2023 as inflation remains high and companies put investment on hold, with gloomy implications for longer-term growth, the Confederation of Business Industry forecast.

“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,”

The CBI’s forecast marks a sharp downgrade from its last forecast in June, when it predicted growth of 1. 0% for 2023, and it does not expect gross domestic product (GDP) to return to its pre-COVID level until mid-2024.

Britain has been hit hard by a surge in natural gas prices following Russia’s invasion of Ukraine, as well as an incomplete labour market recovery after the COVID-19 pandemic and persistently weak investment and productivity. British inflation hit a 41-year high of 11. 1% in October, sharply squeezing consumer demand, and the CBI predicts it will be slow to fall, averaging 6. 7% next year and 2.9% in 2024.

The CBI’s GDP forecast is less gloomy than that of the British government’s Office for Budget Responsibility – which last month forecast a 1.4% decline for 2023.

Reuters.

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