LONDON Reuters - Britain's economy looks set to grow more slowly than previously thought this year and in 2023 due to global supply chain problems, and the government must encourage longer-term business investment, an employers group said on Monday.
The Confederation of British Industry forecasts for economic growth in 2021 were revised to 6.9% and 5.1% in 2022 from previous estimates of 8.2% and 6.1%.
It said the downgrade mostly reflected weaker growth since June and the supply chain problems that have slowed the recovery from last year's coronaviruses slump, which is likely to end in mid- 2022.
With exports still weak, household spending would drive 90% of the growth next year and two-thirds of it in 2023 thanks to the strong jobs market and savings racked up during the epidemic.
Business investment was expected to grow by 8.2% next year and go above its pre-pandemic level, but the bounce would probably prove short-lived, with corporate investment falling back in mid- 2023 when a tax incentive is due to expire.
Rain Newton-Smith, CBI chief economist, said that one policy in place for 18 months can't change underinvestment over four decades.
The CBI called for Prime Minister Boris Johnson to introduce regulations to spur investment and innovation to help build new markets in clean energy and other sectors.
The inflation peaked at 5.2% in April and was over the Bank of England's 2% target for around another year, while unemployment would fall to 3.8% by the end of 2023, according to the new forecasts from the group.
The CBI predicted before the emergence of the Omicron variant of the coronavirus, which has led to tighter COVID rules. Rain-Smith said she was hopeful that Britain's high levels of vaccination would minimize the growth hit.