In its latest forecasts on the UK economy, the Confederation of Business Industry (CBI) said on Monday, they see Britain entering a year-long recession in 2023 amid high inflation and falling business investment.

Key takeaways

“Britain is in stagflation - with rocketing inflation, negative growth, falling productivity and business investment. Firms see potential growth opportunities but ... headwinds are causing them to pause investing in 2023.”

“Britain's economy is on course to shrink 0.4% next year, marking a sharp downgrade from its last forecast in June, when it predicted growth of 1.0% for 2023.”

“CBI predicts inflation will be slow to fall, averaging 6.7% next year and 2.9% in 2024.”

“The CBI forecast business investment at the end of 2024 will be 9% below its pre-pandemic level, and output per worker 2% lower.”

Market reaction

GBP/USD is little affected by the CBI’s gloomy economic outlook, trading 0.32% higher on the day at 1.2325.