The Confederation of British Industry is today warning that, with less than 40 days until the UK Parliament goes into recess, the countdown is on for Prime Minister Boris Johnson and Chancellor Rishi Sunak to take the vital action needed to spare the country from dipping into recession.
With the cost-of-living crunch showing no sign of abating, airports struggling to cope, national rail strikes on the horizon and "Groundhog Day" battles with the EU over the Northern Ireland protocol, the business organisation says there is real risk that the economy stays a distant second to politics this summer.
The CBI's outlook suggests growth will soften as household spending turns downwards amid dented business and consumer confidence.
As a result, the business body has downgraded its GDP growth outlook significantly, to 3.7% in 2022 (from 5.1% previously) and 1.0% in 2023 (from 3% previously).
Inflation reached a 40-year high in April (9%), driven higher by a cocktail of challenges - ranging from supply chain pressures, rising commodity prices and war in Ukraine.
The CBI says inflation is expected to remain high into autumn, rising to another peak in October (8.7%), given a likely rise in Ofgem's energy price cap. The result is a historic squeeze in household incomes, which will lower consumer spending. This in turn will weaken GDP growth towards the end of this year and into the first half of next year.
Tony Danker, CBI director-general, said: "Let me be clear - we're expecting the economy to be pretty much stagnant. It won't take much to tip us into a recession. And, even if we don't, it will feel like one for too many people.
"Times are tough for businesses dealing with rising costs, and for people on lower incomes concerned about paying bills and putting food on the table.
"It's as clear as day that business investment is one of the few bright spots left in our economy.
"We've had weeks of politicking with the country standing on the brink of a summer of gridlock.
"There is only a small window until recess. Inaction this summer would set in stone a stagnant economy in 2023, with recession a very live concern.
"We need to act now to install confidence. This can wait no longer."
Meanwhile, the business organisation expects a small rise in the unemployment rate - ending 2023 at 4.1% - as weaker economic growth weighs on hiring. Nonetheless, this still marks a relatively tight labour market, with many firms presently carrying vacancies.
Exports continue to underperform compared with our international peers, remaining 10% below their pre-Covid level at the end of 2023.
Rain Newton-Smith, CBI chief economist, said: "This is a tough set of statistics to stomach. War in Ukraine, a global pandemic, continued strains on supply chains - all preceded by Brexit - has proven to be a toxic recipe for UK growth.
"The bottom line is that the outlook for UK exports remains far worse than our worldwide competitors. This has got to change for the better.
"Business and government must work together to seek growth globally. As demand shrinks, competition for revenue increases. UK business must be more confident in identifying new markets and utilising all the tools at their disposal - be it from the private sector or public sector."
FTSE 100
The UK's top share index, the FTSE 100, was down 66 points at 7,250 shortly after opening this morning, following Friday's 158-point plunge on the back of the shock rise in US inflation.
Brent crude futures were down 1.5% at $120.24 a barrel.
Companies reporting today
- Full-year results: Molten Ventures, Sirius Real Estate