Unveiling its latest economic forecast on the eve of its flagship annual conference, the UK’s leading business group is forecasting GDP growth of 1.4 per cent in 2013, up from 1.2 per cent in its August forecast, after better than expected GDP growth in the third quarter and following signs of a pick-up in confidence across a broad range of sectors, including services, construction and manufacturing.
Quarter-on-quarter growth is expected to soften in the final quarter of 2013, in part reflecting some volatility in the trade and investment data.
In 2014 and 2015, the CBI expects the recovery to gather pace, forecasting 2.4 per cent GDP growth in 2014, rising to 2.6 per cent growth in 2015, with domestic demand supported by increases in business and housing investment and household disposable income.
Quarter-on-quarter growth of 0.6 per cent is expected in each quarter of 2014 as government spending begins to drag on GDP. While imports will continue to grow as the UK’s domestic situation improves, a return to growth in the Euro area, a broader global recovery and the resulting positive boost to exports should see a positive net trade contribution to growth in 2014 and 2015.
John Cridland, CBI Director-General, said: “The UK is now set fair for growth with confidence returning to Britain’s entrepreneurs.
“The recovery that started in the service sector has fanned out to manufacturing and construction, and is shaping up to be more broad-based.
“The recovery won’t be spectacular, just slow and steady, but appears more solid and better-rooted.
“We’re also expecting business investment to pick up over the next two years and beyond, and net trade will begin to make a stronger contribution to growth. By 2015, the CBI is forecasting growth of 2.6%.”
