CBI @10am: What does the UK economic outlook mean for business?

Speakers:

• John Foster, Director of Policy and Communications, CBI
• Alpesh Paleja, Lead Economist, CBI
• Kate Shoesmith, Deputy Chief Executive, The Recruitment & Employment Confederation
• Ceri Thomas, Editor and Partner, Tortoise Media (chair)

In this session:

John Foster:

•  Today is a big moment in the calendar 3 key enablers of confidence: self-isolation, testing, and face coverings. 
• On self-isolation: 500,000 'pinged' last week via the app and high levels of work absence across the country.  One member reported 30% staff self-isolating. Gov is listening.
• On testing: midnight 19 is deadline for employer ordering LFTs. We're telling gov that they need to make routes to access testing clear to employers.
• On face coverings: no longer a legal obligation but government is recommending in certain situations.
• Last Wednesday, the government updated business guidance under six workplace categories which includes priority action for firms e.g., risk assessments, ventilators, and engaging employees.
• Mass testing, vaccination program and responsible businesses means that we should be able to make a success of the reopening: continuing to press government on test and release, extending workplace testing, and HSE guidance to drive confidence for employees and customers.

Alpesh Paleja:

• Key headline from the forecast is that the worst seems to be behind us. We have seen a turnaround in activity over the past few months due largely in part to the vaccination programme.
• Have substantially upgraded economic forecast for growth of 8% this year and 6% next year (2022). Pre-covid levels by the end of this year.
• Driven by household spending as restrictions lift, and a temporary boost from government spending, and growth from abroad from exports.
• However, business investment remains low. By the end of 2022 we predict it will still be 5% below where we were pre-covid. This is a big drag on UK's productivity which was already historically low.

Kate Shoesmith:

• The labour market has been incredibly turbulent - but REC members now tell us that business has never been busier. Key growth sectors include digital and cyber security and hospitality, and health and social care are also seeing increased demand.
• 1.5m live job adverts at the end of June - which is higher than pre-pandemic levels - but how do we fill these roles?
• Their monthly surveys into business confidence have found firms are now reporting high confidence in hiring intentions and ability to recruit for the first time since EU referendum. But there is a labour supply problem particularly in health and care sector. This will be worse those people who were due to retire but didn't because of the pandemic finally do, and many could exit the sector due to burnout.
• Similarly in the hospitality sector - people not necessarily wanting to go into those roles for safety reasons and many EU workers have left the UK.
• On wage pressures: has been pay growth in some sectors but not all employers can afford to do this to attract staff and in addition, lots of people are looking for benefits beyond just pay e.g., good work/life balance and the values/principles of the company.