CBI reduces Britain’s GDP forecast for next two years
The Confederation of British Industry (CBI) has downgraded the UK economic growth forecast saying the prospects have dimmed ever since a vibrant autumn statement by the Chancellor of Exchequer, some three months ago.
The CBI which is the UK’s leading employers’ organization has cut the forecasts for the next two years, blaming it on “a less rosy outlook for household spending, trade and investment.” It has critically assessed the pay hikes which it says was very modest compared to the household spending.
According to the CBI, the poorer growth prospects are the reason, the Bank of England is keeping its interest rates on hold at 0.5%.
“The UK is likely to remain among the fastest-growing advanced economies, with strong fundamentals, though our forecast recognizes growing overseas risks”, Carolyn Fairbairn, the CBI’s director general was quoted by the daily Guardian.
“And despite domestic demand remaining healthy, it’s clear that increasing productivity remains a priority as a means of achieving sustainable wage growth.”
Chancellor George Osborne’s autumn statement had predicted 2.4% and 2.5% growth respectively for this year and the next. The employers’ body has, however, downed the November forecast for the gross domestic product (GDP) growth to a further 0.3 percentage point to at 2.3% in 2016 and 2.1% in 2017.
The CBI’s assessment comes a little more than a month before Osborne will be delivering his budget. Reports say the independent Office for Budget Responsibility (OBR) is also in the process to come up with new economic forecasts.
A repeated shock in markets and revisions to GDP data make many analysts believe that the economy was less strong in 2015 than previously thought.
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