The Confederation of British Industry (CBI) in its Economic Forecast has said that a booster for business investment is needed to sustain the recovery and unleash UK’s potential.  Headlines from the Forecast include:

• GDP growth expected to be 6.9% this year, 5.1% in 2022 and 3.0% in 2023
• Unemployment rate to fall back to 3.8% at the end of 2023
• Inflation to peak at 5.2% in April 2022

The organisation says “the foundations for the UK’s economic recovery remain firm despite global supply challenges weighing on growth in the near-term, according to the latest CBI economic forecast.

“However, short-term headwinds – including rising costs and shortages – have grown since the business group’s previous forecast in June. Longer-term challenges, notably persistently poor productivity, underline the need for a booster for business investment to support sustainable growth.”

The CBI is forecasting 6.9% growth in GDP over 2021 and 5.1% in 2022, revised down from 8.2% and 6.1% respectively – this largely reflects weaker than expected outturn data since their previous forecast. The business group’s forecast expects supply chain frictions to largely dissipate by the middle of next year.

“Overall, household spending remains the key driver of GDP growth, generating 90% of growth in 2022, and two-thirds in 2023. This is supported by a further improvement in real income, and households running down excess savings accumulated during the pandemic.”

Continued employment growth over the next couple of years also supports household spending.