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Britain threatens to sink into recession, CBI reveals as it warns government to take action


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

The CBI said with less than 40 days until parliament goes into its summer recess, the countdown was on for the prime minister and chancellor to take the “vital measures” needed to avoid a recession.

The group warned there was a risk that the economy could be a “distant second” to politics in the coming months due to the crisis in the cost of living, airports to face, planned national rail strikes and “Groundhog Day” fighting. with the EU on the Northern Ireland Protocol.

The CBI lowered its growth outlook to 3.7% for this year, from 5.1% earlier and just 1% in 2023, from 3%.

The CBI said it believes inflation is expected to remain elevated into the fall, rising to 8.7% in October, leading to “historic pressure” on household incomes that will weigh on consumer spending.

Tony Danker, director general of the CBI, said: ‘Let me be clear – we expect the economy to be pretty much stagnant. It doesn’t take much to plunge us into a recession, and even if we don’t, it will feel like a recession to too many people.

“These are tough times for companies dealing with rising costs, and for lower-income people who worry about paying bills and putting food on the table.

‘It is obvious that business investment is one of the few bright spots in our economy.

“We have been politicking for weeks with the country on the brink of a summer of stalemate.

“There’s only a small window until the break. Inactivity this summer would set a stagnant economy in stone by 2023, with recession a very current concern.

“We must act now to build trust.”

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

Rain Newton-Smith, chief economist at the CBI, added: “This is a tricky set of statistics to digest. War in Ukraine, a global pandemic, continued pressure on supply chains – all preceded by Brexit – have proved a toxic recipe for growth in the UK.

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.

Tony Danker (pictured), director-general of the CBI, angered ministers by telling them to ‘stop acting unilaterally’ to resolve trade problems in Northern Ireland

‘Business and government must work together to grow globally. As demand shrinks, competition for revenue increases. UK companies need to feel more confident in identifying new markets and using all the tools at their disposal – be it from the private or public sector.

CBI under fire for comments in Northern Ireland

The CBI came under fire last night after it urged ministers to abandon plans for a new law to prevent the EU from undermining the peace process in Northern Ireland.

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

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

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

The new Northern Ireland legislation includes plans to remove most EU controls on goods sent to the county and downgrade the European Court of Justice to an advisory role.

Ministers hope the plans will end the supply disruption caused by the controls, ease political tensions in Northern Ireland and convince the DUP to re-share power.

But Danker said the plan could lead to “all kinds of trade conflicts.”

‘The government also has an integral role. Against the background of the rising cost of doing business and continued pressure on the supply chain, easing trade flows is in everyone’s interest. It is not just about lowering non-tariff barriers to trade in Europe and signing free trade agreements.

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

‘Moreover, we can and must do more in our own country to help our exporters as well. Now that the R&D allocations are out, let’s get that funding out the door quickly, to the Advanced Research and Invention Agency 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 exchange for backing the prime minister,” he said.

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

“On Brexit, we need to stop acting unilaterally… once we act unilaterally, we lose the moral high and start escalating into all kinds of trade disputes.”

Mr Danker’s comments sparked an angry response from Tory MPs, who questioned whether the organization has accepted the outcome of the Brexit referendum.

A cabinet minister told the Daily Mail: ‘It is eccentric for the CBI to call for measures to support growth and then oppose the removal of barriers to trade between Britain and Northern Ireland. .

Sir Iain Duncan Smith criticized CBI's response to new Brexit law as 'hopeless'

Sir Iain Duncan Smith criticized CBI’s response to new Brexit law as ‘hopeless’

‘But then the CBI has long been under the spell of the EU.’

Former Tory leader Sir Iain Duncan Smith said: ‘Fighting lose battles is the motto of the CBI. The industry in Northern Ireland is suffering and this is their hopeless response.” Former Cabinet Secretary David Jones said: ‘The CBI should work to help those companies who are having huge problems sending goods to Northern Ireland because of the way the EU is behaving.

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

New legislation aimed at alleviating the problems caused by the EU’s implementation of the Northern Ireland Protocol is being published today.

Northern Ireland minister Brandon Lewis insisted the new measures would be “legal” despite warnings from critics that they would violate international law by nullifying parts of Boris Johnson’s Brexit deal. The government is expected to publish a summary of Attorney General Suella Braverman’s legal advice.

It is believed that Ms Braverman will argue that the “disproportionate and unreasonable” imposition of controls by the EU undermines the functioning of the Good Friday Agreement. Brexiteer Sir Bernard Jenkin supported the ministers’ decision to take unilateral action and said the EU is “trying to cram the UK and bring us back into line”.

In a separate warning, the CBI said the UK was heading for a ‘domestic recession’, with people’s spending set to fall from the second quarter of this year to 2023. It said that this is also the entire economy on the brink of recession.

The CBI is urging Rishi Sunak to cut taxes on corporate spending to help the economy — or risk an “incredibly bad” slump.

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