CBI chief issues stern warning over investment

The director-general of the United Kingdom's business lobby group the Confederation of British Industry, or CBI, has warned that the country has one of the worst climates for investment among advanced economies, with fears of inflation holding back productivity growth, as the country tries to deal with the challenges of both the pandemic and Brexit.

The aftermath of Britain's exit from the European Union, and the impact on workforce numbers in the haulage industry, has been highlighted as a significant contributory factor in Britain's shops and petrol stations struggling to manage supplies, leading to empty shelves and long queues for fuel.

Prime Minister Boris Johnson has attempted to explain this away by calling them signs of an economic readjustment away from a low-skills, low-wages model, a view supported by Chancellor of the Exchequer Rishi Sunak, but speaking on the BBC Radio 4 Today program, CBI chief Tony Danker expressed doubts about the economic outlook.

"If wages go up, that's a good thing and it forces businesses to think about capital and investment," said Danker.

"We've got the worst investment climate of countries in the (Organization for Economic Co-operation and Development). I hope what the chancellor is going to do is figure out how we can get investment and productivity growth in Britain, which we've not had for a decade."

The Bank of England, the central bank, has kept interest rates historically low throughout the pandemic, in a bid to provide economic stimulus, but it has long been warning that inflation could peak at 4 percent this winter. Recent soaring energy costs and the ripple effect of the driver shortage have now led to fears that it could go even higher.

"The chancellor and prime minister have got a very compelling vision for the economy we are transitioning to," said Danker. "They are saying: Let's have high wages, high skills, high investment, high productivity. The challenge we have is only the first one is rising, and that's why people are worried about inflation."

Sunak's speech to the Conservative Party's annual conference on Monday was seen by many as a prelude to his next budget, to be delivered at the end of October.

Much of its content, particularly pledges to increase investment in areas such as AI technology, was welcomed by the business sector.

But, Danker warned, for those goals to be achieved, the government must play its part.

"The government can rely on the skills, ingenuity and delivery capability of business to realize this vision," the Daily Business Group website reported him as saying.

"The chancellor's emphasis on equipping young people for the world of work, from the Kickstart scheme to new AI scholarships, as well as helping people retrain for the jobs of the future, is the right approach.

"The only way to achieve the high-wage, high-skill economy we all want is to unlock productivity through higher investment and growth.

"All must rise together to avoid a further squeeze on living standards and to realize a better decade than the last."