9th November 2015
The UK economy “remains resilient in the face of wider fears for global growth”, the Confederation of British Industry (CBI) said today, as it unveiled its latest quarterly economic forecast.
The business lobby asserted that the UK is enjoying solid growth, despite however downgrading its economic growth forecast for 2015, from 2.6% in August to 2.4%.
It said that this reflects weaker investment growth, driven largely by recent changes to official data.
Next year the business group expects the UK economy to grow at 2.6%, down from 2.8%, as a somewhat gloomier global outlook means that net trade will drag on growth.
Concerns over the global economic stability have already been flagged by the Bank of England’s Monetary Policy Committee, which is responsible for setting interest rates.
As a result the CBI now believes an interest rate rise is likelier to occur in the second quarter of next year, rather than in the first, as predicted in the business group’s previous forecast.
It also expects house price inflation to slow as interest rates increase, with house prices rising by 6% in 2015, slowing to 3.9% in 2016 and 3.5% in 2017.
The business group also unveiled its first forecast for 2017, predicting solid UK growth at 2.4%, with a gradual rise in inflation easing household spending.
John Cridland, CBI director-general, said: “The UK economy’s continued strong performance is a clear sign of its resilience in the face of turbulent times overseas.
“Manufacturers are enduring tougher conditions, as a persistently strong pound is hamstringing our export competitiveness, alongside dampened global growth. But our domestic story is strong and overall we are now in a phase of stable but solid economic growth.
“Mark Carney, the Bank of England Governor, has already signalled that an interest rate rise will be limited and gradual when it comes. We know that businesses are prepared for this.”
Cridland urged that the UK must continue to put solid foundations in place to support the economy, such as ploughing ahead with critical infrastructure decisions, maintaining flexibility in our labour market and keeping an open door to businesses and talent from abroad that create jobs and boost our economy.
“Tackling these issues is just as important for businesses as securing reform in the European Union and is crucial for the UK to meet its global ambition in the face of stiff competition,” he added.
Elsewhere Vote Leave, an organisation campaigning for the UK to exit the EU has pleaded to the incoming leader of the CBI to rethink its position on membership.
According to BBC News, the group, which has previously labeled the CBI “the voice of Brussels” has written to Carolyn Fairbairn outlining its concerns on the matter.
The business lobby has said Fairbairn would give the letter “appropriate consideration” when she replaces John Cridland as director general of the CBI later in November.