While some economies risk slipping back to medieval times, Britain may rise out of the storm without any permanent damage.
Nevertheless, the Confederation of British Industry (CBI) is sounding the alarm. The UK stands to lose ten years of economic growth if the country's authorities do not take action on tax benefits and new rules for trade between Ireland and Northern Ireland. The leading business organization believes that Britain has already entered a "short and shallow" recession. Business investment and productivity are forecast to be 9% below 2019 levels and 2% below pre-pandemic levels. If things do not change, the UK will see a lost decade of economic progress.
"The UK is in stagflation, with skyrocketing inflation, negative growth, falling productivity, and business investment," CBI Director-General Tony Danker said.
The new projections suggest that the country's economy will contract by 0.4% next year. In 2024, GDP is anticipated to rebound, expanding by 1.6%. Thus, "over the next two years it is going to be challenging" as households are expected to face a heavy hit to living standards, UK Economy Minister Jeremy Hunt noted earlier.
