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September 22, 2010    

Government austerity measures will slow recovery, say CBI

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by Kay Murchie

Employers’ group, the Confederation of British Industry (CBI), has revised its growth forecast for the UK’s economy.

It is now predicting the economy will grow by 2% in 2011, not 2.5% as forecast earlier this year.

Its downward revision is due to the massive spending cuts, introduced by the Government - deemed necessary in order to slash the budget deficit.

The business group said higher inflation and modest wage increases will impact on consumer spending next year, and this will hamper growth.

However, the group does not believe the UK will experience a double dip recession.

CBI Director-General Richard Lambert, comments: “The degree of uncertainty around the outlook remains high, but our view is that the UK’s tentative recovery will be sustained, albeit with weaker levels of growth.

“The fragile nature of the recovery is why, in the forthcoming spending review, the government must focus its scarce resources on those areas which most galvanise growth, namely infrastructure and capital investment,” he added.

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