Britain needs more migrant labour to boost productivity as it faces a toxic mix of soaring inflation and shrinking growth, the country’s main lobby group warned Monday. The verdict from the Confederation of British Industry came at its annual gathering in Birmingham, Britain’s second biggest city. The CBI conference comes after the government of Prime Minister Rishi Sunak slashed spending and hiked taxes in a budget, despite admitting that the inflation-wracked economy had fallen into recession. “We come together, once more in extraordinary times,” CBI director-general Tony Danker told delegates in Birmingham, central England. “Britain is in the middle of stagflation — rocketing inflation and negative growth — for the first time that probably most of us can remember. “We know how to fight inflation. We know how to fight recession. But we don’t really know how to fight them together.” Sunak, who also addressed the CBI on Monday, took office one month ago after predecessor Liz Truss delivered an unfunded tax-slashing mini-budget that tanked the pound and sent UK borrowing costs soaring. UK inflation sits at a 41-year peak of 11.1 percent on rocketing food and energy costs in the wake of the Ukraine war. Consumer prices have also raced higher as demand rebounds following the lifting of pandemic lockdowns. That has worsened a cost-of-living crisis for businesses and individuals, hit also by soaring interest rates as the Bank of England seeks to cool runaway inflation. The UK has forecast the economy to shrink 1.4 percent next year, hit also by fallout from Brexit which has resulted in foreign workers returning home. “When you look at the (growth) data, the only thing holding it up, actually, is higher hours worked due to higher immigration,” Danker added on Monday. “People are arguing against immigration — but it’s the only thing that has increased our growth potential since March. “Let’s be honest — we don’t have the people we need, nor do we have the productivity.” Sunak, addressing the conference later on Monday, ducked the CBI’s call for more legal migrant labour — and stressed that he was focussed on curbing illegal migration. He also told CBI delegates that last week’s budget sought “to grip inflation and balance the books”. “The best way to help people is by stopping mortgages, rents and food prices from spiralling out of control,” Sunak said. “Re-establishing stability is the critical first step. But there is so much more we need to do,” he added, stressing he wants to see more business innovation to boost economic activity.