Leading business groups give assessment of UK economy
Business group, the Confederation of British Industry (CBI), said the UK economy is in for a “sluggish” recovery this year, predicting growth of just 1% in 2010 and 2.5% in 2011.
The forecasts are slightly below the Government’s target of 1.25% this year and 3.5% for 2011.
Richard Lambert, director general of the CBI, comments: “The economic outlook is improving, but the lack of a clear drivers for growth will make for a bumpy ride in the months ahead.
“[We expect] the recovery in 2010 to be slow and sluggish, with few signs of real strength until well into next year,” he added.
According to the CBI, major factors holding back growth include consumers’ reluctance to spend amid unemployment fears, as well as the end of stimulus measures, such as the car scrappage scheme.
In the meantime, economists at the Ernst & Young ITEM Club said the Government’s growth forecasts are too optimistic but they believe Chancellor, Alistair Darling, may revise the predictions in Wednesday’s Budget.
Peter Spencer, chief economic adviser to the ITEM Club, said: “[The chancellor's] projections for future years are too bullish – based on a strong pick-up in consumer spending that is unlikely to materialise.”
Meanwhile, both business groups are calling for more detail on the Government’s plans to cut the UK’s ballooning deficit.
In related news today, the Bank of England’s Monetary Policy Committee member, Andrew Sentance, has acknowledged that there is some risk of a double dip recession.
Mr Sentance said: “You have to recognise there is some risk of a double dip, but that’s not the central forecast.”