CBI warns UK economy 'heading for worst of all worlds' as firms fear 2025 slump
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Businesses have issued a warning to Rachel Reeves that the economy is "headed for the worst of all worlds" with activity expected to fall sharply in the first three months of 2025. A major survey by the Confederation of British Industry (CBI) found firms expected to reduce both output and hiring. The Chancellor’s hike to employers’ national insurance, expected to net about £25bn a year, was highlighted as one contributing factor to the bleak outlook.
Alpesh Paleja, CBI’s interim deputy chief economist, lamented: "There is little festive cheer in our latest surveys, which suggest that the economy is headed for the worst of all worlds – firms expect to reduce both output and hiring, and price growth expectations are getting firmer.
"Businesses continue to cite the impact of measures announced in the Budget – particularly the rise in employer NICs – exacerbating an already tepid demand environment. "As we head into 2025, firms are looking to the Government to boost confidence and to give them a reason to invest, whether that’s long overdue moves to reform the apprenticeship levy, supporting the health of the workforce through increased occupational health incentives or a reform of business rates.
"In the longer term, businesses will be looking to the industrial strategy to provide the stability and certainty which can unlock innovation and investment – and provide that much-needed growth for the economy which can deliver prosperity for firms and households alike.".
The CBI's latest growth indicator survey, which gathered insights from 899 companies between November 25 and December 12, has revealed that growth expectations are now at their most pessimistic since the aftermath of Liz Truss's turbulent stint as Prime Minister.
