CBI revises down growth forecast due to weak conditions

INFLUENTIAL business organisation, the CBI, has revised down its full year growth forecast to -0.3% as result of "weaker economic conditions".

Having said in May that it expected the economy to grow 0.6% this year, it now does not expect growth to return to the economy towards the end of the year.

CBI said the new forecast reflects "a more negative first half-year and a more modest rate of growth in the second half than was expected in May."

Growth projections for 2013 have also been trimmed, from 2% to 1.2% although the organisation expects heavy discounting by retailers and a sharp fall in world commodity prices to cause inflation to fall quicker than expected.

Downward pressure on wages will help keep inflation close to the Bank of England's 2% target throughout 2013.

Director general John Cridland said: "At present I believe the economy is flat rather than falling but, nonetheless, momentum seems to have weakened and the latest official figures put the UK in recession for the second quarter of this year.

“Underlying growth will return to the economy later in the year than previously expected, with a somewhat better outlook next year. However, euro area uncertainty, and the looming ‘fiscal cliff’ of spending cuts and tax increases in the US will only add to the sense of unease during the coming months.”

Source : Chris Barry – TheBusinessDesk.com
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