Member Article

Growth will restart in Q3 says CBI

CBI economic forecasts indicate that the UK economy will see growth resume in the second half of 2012, with faster GDP growth during 2013.

It is expected that GDP growth for the whole of 2012 will be 0.6%, down from the forecast in February of 0.9%. Despite this, growth in the latter half of the year remains broadly unchanged, and in 2013 GDP growth is expected to be 2%.

John Cridland, CBI Director-General, said: “Despite the disappointing GDP estimate for the first quarter from the ONS, we still think the UK economy will grow in 2012, with faster growth next year.

“Optimism among businesses has been increasing since the turn of the year, with manufacturing demand holding up. And that is beginning to translate into more jobs and investment.”

Quarterly growth will be relatively flat in Q2 due to the additional Diamond Jubilee bank holiday. Despite this there will be an improvement in the second half of the year, reflecting improvements in the global economy, and an anticipated easing in inflationary pressures due to the Olympics.

Inflation is expected to be higher than previous estimates,due to recent oil prices, but it should continue on a downward trend and will come close to hitting Bank of England estimates in spring 2013.

However, the global economy continues to pose a number of significant challenges, and as concerns over Eurozone stability rise again, confidence amongst businesses and households will remain fragile.

Mr Cridland added: “We have always said that the path back to sustainable economic growth will be a long and difficult one, with many bumps along the way.

“To re-balance our economy towards exports and investment will take time and patience.”

Public sector borrowing is also expected to be around £6-8 billion higher than Office of Budget Responsibility forecasts at £128.2 billion in 2012/13 and £1.4.1 billion in 2013/14.

Interest rates are expected to remain unchanged throughout most of the period, with a rise expected in the latter part of 2013.

This was posted in Bdaily's Members' News section by Ruth Mitchell .