LONDON (Reuters] – The UK’s economy will grow slower than expected this year due to problems in global supply chains. A group of employers said Monday that the government needs to encourage investment over the long term.

Confederation of British Industry reduced its expectations for economic growth from 8.2% and 6.1% to 6.9% and 5.1% respectively in 2021, compared with previous estimates of 6.1% and 8.2%.

The downgrade was mostly due to lower growth than its June forecasts and the possibility that supply chain problems have slowened recovery from last years coronavirus crisis. It is expected the problem will end around mid-2022.

While exports remain weak, household consumption would drive 90% and 2/3 of the growth in 2020. That’s thanks to a strong job market and increased savings during the pandemic.

The outlook for business investment growth was good. It would grow 8.2% next year. This is a rise that will surpass the pre-pandemic peak. But, corporate investment could plummet in mid-2023 as a tax incentive ends.

Rain Newton-Smith from the CBI, chief economist said, “A policy that is in effect for only 18 months won’t affect under-investment across four decades.”

CBI called upon Boris Johnson as Prime Minister to implement regulations that encourage innovation and investment to build new markets in clean-energy and other areas.

According to the new projections, inflation would reach 5.2% by April. This will be above the Bank of England’s target of 2% for another year. Unemployment would drop to 3.8% by 2023.

CBI forecasts were done before Omicron, a variant of coronavirus emerged. This has resulted in tighter COVID regulations. Rain-Smith stated that she believed Britain’s high vaccination rates would reduce the impact on growth.