According to the British Chamber of Commerce, the UK’s economic growth will “stabilize” this year before falling into negative territory for a short time.
The business group downgraded its 2022 growth forecast from 3.6% to 3.5% and said inflation would hit 10% last quarter – well above average wage growth.
Investment growth expectations have also been cut this year, from 3.5% to 1.8%, according to the BCC report.
The outlook is bleak after a warning from one of the world’s leading economic authorities that UK growth next year will be worse than any G20 country except Russia.
According to the OECD (Organization for Economic Cooperation and Development) there will be no GDP growth in 2023.
The group says the UK is threatened by rising interest rates and taxes, as well as high inflation leading the way increase in fuel prices and energy costs.
It is a review supported by the BCC.
Alex Veitch, the group’s policy director, said “the difficulties facing the UK economy show little sign of abating”.
“The war in Ukraine comes at a time when the UK is starting to recover from COVID, which has hit business profits even harder,” he said.
“The drop in business investment forecasts is particularly worrisome.
“It’s important to take urgent action here and we’re having constructive conversations with the government about looking at funding grants and other policies to encourage business investment. .”
‘Stability and support’ policies are needed
Mr. Veitch said growth could also be hit by a drop in consumer spending, which is caused by wage increases that follow rising costs.
“We forecast that, if trends continue, inflation will only return to the Bank of England’s target level by the end of 2024 …”, the BCC head of policy, who called for “the policy of stability and support” to help companies.
Shadow business secretary Jonathan Reynolds said the Tory’s failure was “hindering British business”.
“Labour will grow our economy with plans to buy, produce and sell more in the UK, pledge to invest in our climate and cut taxes for small businesses now to bring Our economy grows on all pillars,” he said.
A Treasury spokesman said the UK had the fastest growth rate in the G7 last year and the lowest unemployment figure in nearly 50 years.
“While we cannot completely insulate the UK from global pressure, we have a plan to grow and are supporting people with the cost of living,” they said.
“The eight million most vulnerable families will receive at least £1,200 in direct payments this year, with all families receiving £400. We also invest in capital, people and ideas. ideas to drive growth and living standards in the years to come.”