• The UK economy could be destined for a downturn, causing the cost of living to skyrocket.
• A key business organization issues a grave warning about the country’s financial prospects in the coming year.
• The CBI’s prediction came just hours before official numbers proved that the economy dropped in April for the second time.

The UK economy could be destined for a downturn, causing the cost of living to skyrocket.

A key business organization issues a grave warning about the country’s financial prospects in the coming year.

The CBI’s prediction came just hours before official numbers proved that the economy dropped in April for the second time.

According to figures from the Office for National Statistics, gross domestic product decreased by 0.3 percent in April, compared to 0.1 percent in March.

The impact of the test and trace program’s winding down on the health sector, as well as the impact of increased energy prices on manufacturing, were the biggest drags on growth, according to the ONS.

Read more: UK economy contracts in April as inflation weighs

The CBI did not predict a recession outright, but warned the economy will be hanging just above the line and might easily go through.

It lowered its growth forecast for this year to 3.7 percent from 5.1 percent previously, and for 2023 to barely 1% from 3 percent.

The CBI expects that inflation will stay high into the autumn, rising to 8.7% in October, resulting in a “historic pressure” on household earnings, which will affect consumer spending.

The CBI urged for actions to address labor and skills shortages, among other things.

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The figures were described by Rain Newton-Smith, the CBI’s senior economist, as “a difficult set of statistics to digest.”

When combined with Brexit, he said, the war in Ukraine, a worldwide pandemic, and persistent stress on supply chains are a “poison mix” for growth.

‘Post-Brexit regulatory reforms to encourage growth, innovation, and sustainability can create competitiveness,’ Mr. Newton-Smith concluded.

‘However, divergence for the sake of divergence could add more red tape and friction to the purpose, weakening it.’

George Eustice, the environment secretary, acknowledged that there are “some genuine problems ahead,” but praised the government’s economic management.

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