Shock 0.3% to UK economy in April as CBI demands ‘major action’ to stave off recession | Business Newsletter
According to official figures released in April, the UK economy shrank 0.3% as the CBI, the UK’s largest group of employers, asked the government to “take significant action” to prevent recession due to inflation.
The Office for National Statistics (ONS) is expected by economists to confirm a slight increase in gross domestic product (GDP) for the month of 0.1% after a small decline in the previous month.
The ONS said every major sector of the economy contributed to April’s decline.
Sky News data and economics editor Ed Conway said it was “disappointing news” given the economy is going downhill at the moment.
“This is worse than economists have been expecting,” he said, explaining that the economy appears to be headed for a contraction or stagnation, and possibly even a recession.
Bell data warns the economy faces a prolonged period of low growth, caused by cost of living crisis that is only expected to pick up in the coming months as rising energy bills lead to further inflation as things like fuel and food take a hit in the supply chain.
The forecasts prompted the UK chambers of commerce and the OECD to downgrade growth expectations last week, later warning that The UK has the weakest outlook of any major Russian economy.
The CBI lamented a “toxic formula” for growth and warned there was a risk the economy would be “far second” to politics in the coming months because of the cost of living crisis, airport struggle to cope, plan National railway strike and “Day of the Ground Dog” war with the EU over the Northern Ireland Protocol.
It said that with less than 40 days left until parliament enters summer recess, the countdown clock is on for action to be taken.
CBI has lowered its growth outlook to 3.7% for this year, from 5.1% previously and just 1% in 2023, from 3%.
It said it believes inflation is expected to remain high into the fall, leading to a “historic squeeze” in household incomes, which will weigh on consumer spending.
“Times are tough for businesses dealing with rising costs and for those with lower incomes concerned about paying bills and putting food on the table.
“It’s clear that business investment is one of the few bright spots left in our economy.
“We’ve had weeks of political struggle with a country on the brink of a summer stalemate.
“There is only a small window until recess. Inactivity this summer will put the economy to a standstill in 2023, with recession being a very direct concern.
“We need to act now to bolster confidence.”
The CBI calls for measures that include steps to alleviate skills and labor shortages.
Its chief economist, Rain Newton-Smith, added: “This is a tough set of statistics. developments.”
