Business is approaching a “cliff edge” as it deals with long-term challenges such as persistently poor productivity, according to a new report.
The CBI said the foundations for economic recovery remained firm despite global supply issues affecting growth in the near-term.
But its latest economic forecast warned that short-term problems such as rising costs and shortages have worsened since the summer.
Longer-term challenges, notably persistently poor productivity, underlined the need for a “booster” for business investment to support sustainable growth, said the report.
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.
The business group said it expects supply chain frictions to largely dissipate by the middle of next year
Tony Danker, CBI director general, said: “The challenge for January 1 is now very clear for the Ƶ economy.
“Significant headwinds and rising costs of living threaten the extent of recovery and prospects for economic success.
“These hurdles for firms will provide a major test for Government – can they foster sustainable Ƶ investment and growth?
“The Ƶ’s New Year resolution must be to give firms the confidence to go for growth. We should be raising our sights on the economy’s potential and seizing the moment.
“I know from speaking with firms of all sizes that they have an ambitious investment mindset, and are anxious to implement growth plans.
“But while intentions have thawed, we’re coming up to a cliff edge in 2023.”
Rain Newton-Smith, CBI chief economist, added: “We expect a pretty firm economic recovery ahead, though understandably the emergence of Omicron poses another downside risk to our forecast.
“Increasing exports is a vital component of sustainable growth. Exporting companies are more productive, resilient and help create internationally competitive Ƶ regions.
“Let us be candid – Ƶ exports are being outpaced by our global peers which, if allowed to continue, will negatively impact our economy in the long term.
“We must continue to address market access barriers globally while supporting all businesses to seek growth internationally.”
