Shoppers pass a closed down retail shop space on Oxford Street in London, United Kingdom on November 15, 2022.
London CNN Business  — 

The United Kingdom faces a “lost decade” of growth if action isn’t taken to address slumping business investment and worker shortages, a leading business lobby group has warned.

In a bleak economic forecast published on Monday, the Confederation of British Industry (CBI) said that three quarters of companies are struggling to find the skills and workers they need. It urged changes in government policy, including a more flexible immigration system and tax breaks to boost investment.

“Britain is in stagflation — with rocketing inflation, negative growth, falling productivity and business investment. Firms see potential growth opportunities but a lack of ‘reasons to believe’ in the face of headwinds are causing them to pause investing in 2023,” CBI director general Tony Danker said in a statement.

“We will see a lost decade of growth if action isn’t taken. GDP is a simple multiplier of two factors: people and their productivity. But we don’t have people we need, nor the productivity,” Danker added.

The United Kingdom is the only G7 economy that still hasn’t recovered fully from the pandemic. Soaring energy and food costs drove inflation to a 41-year high in October. Widespread strikes have become the norm in recent months as workers feel the sting of a worsening cost-of-living crisis.