LONDON

The UK government is under growing pressure to revive the economy as businesses brace for job cuts and price hikes, while millions of households anticipate worsening finances in the months ahead.

Ahead of a key economic speech this week by Chancellor Rachel Reeves, the Confederation of British Industry (CBI) has warned that private sector firms are scrambling to adjust budgets in response to measures introduced in last October’s budget.

The CBI, one of the UK’s leading business lobby groups, has forecast another “significant fall” in business activity over the next three months, extending a period of economic stagnation that dates back to mid-2022.

“After a grim lead-up to Christmas, the new year hasn’t brought any sense of renewal, with businesses still expecting a significant fall in activity,” said Alpesh Paleja, the CBI’s interim deputy chief economist.


“There is an urgent need to get momentum back into the economy. The government can help shift the UK’s economic narrative with a more determined focus on measures that could drive growth,” Paleja added.

Labour, which has been in power for less than a year, is under pressure to deliver on its promise of economic stability and growth.

Reeves is expected to use her upcoming speech to reaffirm Labour’s commitment to tackling economic stagnation and restoring business confidence.