CBI chief calls for Cobra approach to economy
One of Britain’s business leaders has warned that Britain will slide into full-blown recession if the UK government does not get a grip on the economy and the cost of living crisis.
CBI boss Tony Danker wants Downing Street to call “weekly Cobra-style meetings” to address inflation and weakening business confidence.
The director general of the business group said ministers need to stop spending time on less important matters such as bringing back imperial weights and measures and devote their attention to key issues.
He said bosses were “in despair” over the lack of focus on growth and inflation amid wrangling over Prime Minister Boris Johnson’s political future. He warned that if ministers did not develop a coherent economic rescue plan Britain could slip into a “full-blown recessionary crisis”.
In an interview he said: “The political class is in danger of detaching itself from the economic realities.
“At the moment when we need an utter focus on the economy, we have a Conservative Party having a very big debate about ideology and leadership. It is time for the prime minister and the cabinet to put the economic crisis first, to grip it like they did Covid — the prime minister and the chancellor should be co-chairing weekly Cobra-style meetings.”
The Organisation for Economic Co-operation and Development (OECD) last week predicted that the UK would be the worst-performing G20 economy after Russia next year owing to its unique cocktail of soaring inflation, higher interest rates and rising taxes.
The pound is close to a two-year low against the dollar as traders bet that the outlook will darken over the winter, with the average household energy bill expected to jump by £800 to £2,800 in October.
Mr Johnson said in a speech on Thursday that boosting Britain’s growth rate was his top priority. Rishi Sunak, the Chancellor, has pledged to cut business taxes in the autumn.
But the CBI is forecasting a recession in household consumption, which it says will turn negative in the fourth quarter of this year and not return to growth until 12 months later. Mr Danker said that if business confidence fell any further that could lead to a whole-economy recession.
He said he is worried by “some evidence that global companies are essentially ruling out Britain as a good investment bet right now because of these levels of uncertainty.
“The entire economic strategy right now should be focused on changing confidence, and I don’t think you can wait until the November budget to do that — I think it’ll be too late by then.”
The CBI is demanding a permanent extension to Mr Sunak’s “super-deduction” tax break for business investment and a cut in the approval time for offshore wind farms.
It also wants a resolution of the Northern Ireland protocol, a deal with transport unions to avoid a wave of summer strikes and a replacement for the post-Covid Recovery Loan Scheme.
The organisation is calling for updates to the shortage occupations list to help bring in more workers from overseas and says a one-year break should allow employers divert apprenticeship levy funds into tackling labour problems.
Mr Danker believes the EU is being inflexible over the Northern Ireland protocol but says the UK should not act unilaterally as that would see the problem escalate into “all kinds of trade disputes”.
He said the government need to reassure investors that departments were working together and that the economy was under strong leadership.
TOMORROW IN DAILY BUSINESS: CBI growth forecast and what businesses say is their priority