CBI revises growth prospects for UK economy

| June 14, 2010 | 0 Comments
”CBI

Releasing its latest economic forecasts today, the Confederation of British Industry (CBI) is forecasting that the economy will expand by 1.3% in 2010 - slightly higher than its forecast of 1% in March.

The business group revised its growth forecast upwards due to a strong recovery in the manufacturing industry.

However, it left its prediction for growth in 2011 unchanged at 2.5%.

The CBI comments: “The slight upward revision reflects the relative strength of the economy over recent months, with industrial production showing solid growth and overseas demand for UK-made goods strengthening buoyed by the relative weakness of sterling.”

However, the CBI warns that growth could be hampered in the latter half as the Government implements the massive spending cuts and, as a result, the outlook remains uncertain.

Richard Lambert, CBI director general, said: “Although the risks to the economic outlook have increased, our view is that the UK’s tentative recovery will be sustained. However, economic growth will be weak and we do not expect a return to pre-recession GDP levels until 2012.”

In related news, the newly-established Office of Budget Responsibility (OBR) is scheduled to publish growth forecasts later.

According to economists, the OBR, which is led by former Treasury official Sir Alan Budd, is expected to say ex-Chancellor Alistair Darling’s 2011 forecast of 3% – 3.5% was too ambitious.

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