CBI reduces economic growth forecast
Business investment expected to help drive growth
The UK economy will continue to make headway in 2011, but growth will be “patchy and slow”, according to the Confederation of British Industry’s (CBI) latest economic forecast.
The business group has predicted that this year’s gross domestic product (GDP) growth rate will be 1.7%, marginally lower than the previous forecast of 1.8%. Growth of 2.2% is expected in 2012, down slightly from February’s forecast of 2.3%.
Business investment is also expected to help drive economic growth, as the CBI report shows intentions to invest are at a historic high.
Business investment is forecast to increase by8.8% in 2011 and 8.7% next year. The CBI’s report also predicted a rise in both this year and next. Exports are set to rise by 8.6% next year and 7.6% in 2012, outpacing the rise in imports and triggering a positive overall impact on GDP.
John Cridland, CBI director-general, said that despite the “sluggish” pace of growth, “there are some brighter spots in the forecast.”
He added: “Global economic conditions remain upbeat, and we expect to see a stronger performance by UK exporters.
“Business investment will also make a firm contribution to growth in 2011 and 2012. But the rebalancing of the economy is going to take time to feed through, and domestically it may not feel like much of a recovery for some time yet.”