Britain is on the verge of slipping into recession, CBI reveals as it warns government to take action

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A leading business group has downgraded its outlook for economic growth amid calls for government action to avert a recession.

The CBI said that with less than 40 days before Parliament begins its summer recess, the clock is ticking for the Prime Minister and Chancellor to take the “vital actions” needed to avoid a recession.

The group warned there was a risk the economy could be a ‘last second’ behind politics in the coming months due to the cost of living crisis, airports struggling to cope, planned national rail strikes and “Groundhog Day” battles with the EU over the Northern Ireland Protocol.

The CBI cut its growth outlook to 3.7% for this year from 5.1% previously, and to just 1% in 2023 from 3% – while warning that Britons face the biggest strain on their finances since the 1950s.

The CBI said it believes inflation is likely to remain high through the fall, hitting 8.7% in October, leading to a “historic squeeze” in household incomes, which will affect consumer spending.

CBI Chief Economist Rain Newton-Smith said: “This is a tough set of statistics to bear.” War in Ukraine, a global pandemic, continued strains on supply chains – all preceded by Brexit – have proven to be a toxic recipe for UK growth’

The CBI said that with less than 40 days before Parliament begins its summer recess, the countdown has begun for the Prime Minister (pictured) and Chancellor to take the

The CBI said that with less than 40 days before Parliament begins its summer recess, the countdown is on for the Prime Minister (pictured) and Chancellor to take the ‘vital actions’ needed to avoid a recession.

Tony Danker, chief executive of the CBI, said: ‘Let me be clear – we expect the economy to be about flat. It won’t take much to tip us into a recession, and even if we don’t, too many people will feel like it.

CBI under fire for comments on Northern Ireland

CBI chief executive Tony Danker (pictured) angered ministers by telling them to

Tony Danker (pictured), chief executive of CBI, angered ministers by telling them to ‘stop acting unilaterally’ to solve trade problems in Northern Ireland

The CBI came under fire last night after urging ministers to drop plans for new legislation to stop the EU undermining the Northern Ireland peace process.

In a provocative intervention, CBI chief Tony Danker said it was time for the government to ‘stop acting unilaterally’ to solve post-Brexit problems in Northern Ireland.

His call came as ministers prepared to publish new Brexit legislation today designed to stop the EU driving a wedge between Northern Ireland and the rest of the UK.

Separately, the CBI has warned Britain is heading for a ‘household recession’ as families cut spending amid the cost of living crisis.

Northern Ireland’s new legislation will remove most EU checks on goods sent to the province and demote the European Court of Justice to an advisory role.

Ministers hope the plans will end the disruption to supplies caused by controls, reduce political tensions in Northern Ireland and persuade the DUP to resume power-sharing.

But Mr Danker said the plan could lead to “all sorts of trade disputes“.

“Times are tough for businesses facing rising costs and for low-income people anxious to pay their bills and put food on the table.

“It’s clear as day that business investment is one of the few bright spots in our economy.

“We have had weeks of politics with the country on the brink of a summer of stalemate.

‘There is only a small window to recess. Inaction this summer would set in stone a stagnant economy in 2023, with the recession a very serious concern.

“We need to act now to build trust.”

The CBI called for action, including measures to alleviate labor and skills shortages.

Rain Newton-Smith, CBI’s chief economist, added: “This is a tough set of statistics to bear.” War in Ukraine, a global pandemic, continued strains on supply chains – all preceded by Brexit – have proven to be a toxic recipe for UK growth.

“The bottom line is that the outlook for UK exports remains much worse than that of our global competitors.” This must change for the better.

“Business and government must work together to seek growth globally. As demand decreases, competition for revenue increases. UK businesses need to be more confident in identifying new markets and using all the tools at their disposal, whether they come from the private or public sector.

“The government also has a vital role to play. In an environment of rising cost of doing business and persistent pressures on the supply chain, smoothing trade flows is in everyone’s interest. It’s not just about lowering non-tariff trade barriers in Europe and signing FTAs.

“Post-Brexit regulatory reforms to support growth, innovation and sustainability can boost competitiveness. But a divergence for the sake of doing so could introduce more bureaucracy and friction, undermining that mission.

“Furthermore, we can and must do more at the national level to also help our exporters. Now that the R&D allocations are known, let’s quickly shift that funding to the Agency for Advanced Research and Invention and others.

In an interview with The Sunday Times, Mr Danker launched a wide-ranging attack on the government, saying ministers were too focused on political issues rather than the economy. “You have Conservative politicians pushing for their own ideological favorites in return for supporting the prime minister,” he said.

“Some want tougher action, some want Thatcherite ideas like the right to buy, some want tougher immigration rules, some want lower personal taxes. And that goes against the good economic picture.

Sir Iain Duncan Smith called

Sir Iain Duncan Smith has described the CBI’s response to new Brexit legislation as ‘hopeless’

“On Brexit, we have to stop acting unilaterally… as soon as we behave unilaterally, we lose high morals and start escalating into all sorts of trade disputes.”

Mr Danker’s comments prompted an angry response from Tory MPs, who questioned whether the organization had accepted the Brexit referendum result.

A Cabinet minister told the Daily Mail: ‘It is eccentric for the CBI to call for action to support growth and then oppose the lifting of barriers to trade between Britain and Northern Ireland. North.”

“But the CBI has long been in the grip of the EU.”

CBI urges Rishi Sunak to cut taxes on business spending to help the economy – or risk an 'unbelievably bad' crisis

CBI urges Rishi Sunak to cut taxes on business spending to help the economy – or risk an ‘unbelievably bad’ crisis

Former Tory leader Sir Iain Duncan Smith said: ‘Fighting losing battles is the motto of the CBI’. Industry in Northern Ireland is suffering and this is their hopeless response. Former Cabinet Minister David Jones said: “The CBI should be working to help businesses who are having huge difficulty shipping goods to Northern Ireland due to EU behaviour. “

“It took them a long time to mend their relationship with the government after Brexit and I’m surprised they’re sticking their oars again.”

Today sees the publication of new legislation designed to alleviate the problems caused by the EU’s implementation of the Northern Ireland Protocol.

Yesterday Northern Ireland Secretary Brandon Lewis insisted the new measures would be ‘lawful’ despite warnings from critics that they risked breaking international law by nullifying parts of the deal Boris Johnson on Brexit. The government is expected to release a summary of the legal advice produced by Attorney General Suella Braverman.

Ms Braverman is believed to be arguing that the EU’s ‘disproportionate and unreasonable’ imposition of checks undermines the functioning of the Good Friday Agreement. Brexiteer Sir Bernard Jenkin backed ministers’ decision to take unilateral action, saying the EU is ‘trying to stuff the UK and force us back into alignment’.

In a separate warning, the CBI said the UK was heading into a “household recession”, in which people’s spending would fall from the second quarter of this year to 2023. It said it could also leave the whole economy on the verge of a recession.

The CBI is urging Rishi Sunak to cut taxes on business spending to help the economy – or risk an ‘unbelievably bad’ crisis.

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