CBI: Rising living costs are threat to economic recovery | City & Business | Finance


It has cut its forecast for GDP expansion from 8.2 to 6.9 per cent this year and from 6.1 to 5.1 per cent in 2022.

Bosses believe supply chain issues will take another six months to fix.

But their bigger concerns are the soaring cost of living, doggedly poor productivity and an underperforming export market.

CBI director general Tony Danker, said: “The challenge for January 1 is now very clear.

“Significant headwinds and rising costs of living threaten the extent of recovery and prospects for economic success.

“These hurdles for firms will provide a major test for Government – can they foster sustainable UK investment and growth?

“The UK’s New Year resolution must be to give firms the confidence to go for growth.

“We should be raising our sights on the economy’s potential and seizing the moment. I know from speaking with firms of all sizes that they have an ambitious investment mindset, and are anxious to implement growth plans.

“But while intentions have thawed, we’re coming up to a cliff edge.”

CBI chief economist Rain Newton-Smith added: “We expect a pretty firm economic recovery ahead, though understandably the emergence of Omicron poses another downside risk.

“Increasing exports is a vital component of sustainable growth. Exporting companies are more productive, resilient and help create internationally competitive UK regions.

“UK exports are being outpaced by our global peers which will negatively impact our economy in the long term. We must continue to address market access barriers globally while supporting all businesses to seek growth internationally.”

Meanwhile. manufacturers are being held back by a lack of access to funds, skilled workers and the exporting market, research suggests.

Make UK found two out of five smaller firms had the potential to expand but half believed problems recruiting the right employees was now the top barrier to growth. More than a quarter of 180 manufacturers told the umbrella group that access to overseas markets would allow them to expand.

Make UK chief Stephen Phipson said: “Improved trade access across borders is essential to further push forward growth – but this relies on good relationships between the UK and other countries.”

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