09 Jun 2022
Britain's economy will 'grind to a halt' before shrinking in the second half of this year as rising inflation and tax increases take their toll, according to the British Chambers of Commerce (BCC).
The business group downgraded its 2022 growth forecast from 3.6% to 3.5% It also said inflation would reach 10% in the last quarter - outpacing wage increases.
The BCC also cut investment growth expectations for this year, from 3.5% to 1.8%.
The bleak outlook follows a warning from the Organisation for Economic Co-operation and Development (OECD), that the UK's growth next year will be worse than any G20 country except Russia.
The OECD said the UK is threatened by rising interest rates and taxes, as well as high inflation.
Alex Veitch, Director of Policy at the BCC, said: 'With inflation forecast to race ahead of wages, we are concerned about a dip in consumer spending which would further impact businesses and hamper growth. We forecast that if trends continue, inflation will only return to the Bank of England's target rate at the end of 2024, implying a prolonged period of difficulty for the UK.
'Against this backdrop, the government must put in place stable and supportive policies that help businesses pull the UK out of this economic quagmire. Firms must be given confidence to invest, only then can they drive the growth the economy so desperately needs.'