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CBI revises down Britain's GDP growth expectation

Xinhua, June 8, 2015 Adjust font size:

The Confederation of British Industry (CBI) Monday downgraded Britain's economic growth forecasts for this year and the next due to the weaker than expected official GDP data for the first quarter of 2015.

The British lobbying body is forecasting a 2.4 percent growth for 2015 and 2.5 percent in 2016, lower than its February's projections of 2.7 percent and 2.6 percent respectively.

The CBI believes that the lackluster performance in Q1 2015, which was a 0.3 percent growth, is a "temporary blip", it predicts a "strong rebound" in the coming months with quarter-on-quarter growth of 0.8 percent in Q2, 0.7 percent in Q3 and 0.6 percent in Q4.

Specifically, investment is expected to bolster Britain's GDP growth further, rising by 4.5 percent in 2015 and 6.4 percent in 2016; government consumption is set to decline by 0.7 percent in 2016 after growth of 1.2 percent this year; export performance would improve in 2016, as world growth picks up with the US economy forecast to grow by 2.7 percent, China by 6.5 percent and the Euro zone by 1.8 percent.

The CBI is also predicting average annual inflation of 0.2 percent in 2015 and 1.6 percent in 2016. The unemployment rate will continue to edge down to low levels from 5.5 percent in 2015 to 5.3 percent in 2016.

John Cridland, CBI Director-General, said: "The recovery has built up a good head of steam and we expect to see solid, steady and sustainable growth carrying through into next year."

He said: "Businesses on the ground are seeing a pretty solid recovery. Business investment is making a strong contribution to growth, while solid consumer spending is being underpinned by rock bottom inflation, low interest rates and rising incomes."

"Risks remain in the form of economic instability in Greece and a sluggish Euro zone, and clearly the EU referendum is a hot topic in Britain's boardrooms. Businesses now have certainty that the referendum is happening, but not the outcome. However, most of our members are clear they want to remain in a reformed EU and will get behind an ambitious reform agenda," he added. Endit