Businesses need long-term strategy as weak growth looms in 2024: Beckie Hart

After 0.6 per cent GDP growth in 2023, the outlook for 2024 and 2025 isn’t much better - at just 0.8 per cent and 1.6 per cent respectively.

Similarly, firms are bracing themselves for consumer spending to remain weak next year – at 0.4 per cent, a figure unchanged from 2023.

In part, that’s due to higher interest rates hitting household incomes harder, further squeezing personal finances.

The Bank of England has decided to hold interest rates at 5.25 per cent, in line with the CBI’s own forecast.

And while we don’t expect the Bank of England to raise rates again throughout our forecast, the delay in this feeding-through to the economy means that households are yet to experience the full impact of higher borrowing costs.

Meanwhile, we’re also expecting the current unemployment rate to rise from its current level (4.2 per cent) to a still historically low 5 per cent in mid-2025. While that means some loosening is on the cards, the labour market will remain relatively tight overall.

Businesses, including our members here in Yorkshire and the Humber have been remarkably resilient in light of the economic challenges we’ve seen in recent years. It is, of course, good news that the UK has managed to avoid recession – outperforming last year’s expectations.

But that’s no reason for complacency. We’re still nowhere near meeting our economic potential.

With a general election fast approaching, we have to further strengthen consensus around growth-enhancing measures – like those we saw in Chancellor Jeremy Hunt’s Autumn Statement.

So, commitments on full capital expensing and a quicker roll-out of plans to speed up planning and grid connectivity must be honoured.

But we have to go further to really double down on the UK’s strengths and capture our growth opportunities.

Businesses are looking for a long-term strategy that boosts UK competitiveness, delivers on our climate commitments and tackles our labour shortages – particularly through renewed partnership between business and government. If we want our economy to prosper, we have to explicitly prioritise innovation, skills and productivity – key levers to bring us closer to that goal.

Unless we firm up our foundations for growth, the 2020s will fail to roar.

As we enter 2024, the CBI, our members and the business community across our region will keep a close eye on the UK’s direction of travel when it comes to growth.

We’ve staved off a recession – but we want the UK economy to thrive, not survive.

So, we’ll keep working with decision-makers, in Westminster and in the regions, to make sure firms have what they need to help kickstart growth.

Beckie Hart is CBI regional director for Yorkshire and Humber