UK economy heading for 'worst of all worlds', CBI warns
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The UK economy is "headed for the worst of all worlds" as businesses expect activity to fall at the start of next year, according to the Confederation of British Industry (CBI). The industry group's growth indicator survey found that private sector firms expect to cut down on hiring, reduce output and for prices to rise in the first three months of 2025.
One of the main reasons given by businesses for the poor outlook was Chancellor Rachel Reeves' decision to raise employers' national insurance contributions (NIC) - which is expected to raise around £25bn a year. While the chancellor accepted the budget decision will not be "easy" for businesses, she said earlier this month the government "made a commitment during the general election... that we wouldn't increase taxes on working people".
Please use Chrome browser for a more accessible video player. . Alpesh Paleja, the CBI's interim deputy chief economist, said: "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.". He added that firms are looking for Labour "to boost confidence and to give them a reason to invest" in 2025, "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".
