CBI Predicts Slower Economic Growth

Employers’ mouthpiece, the CBI, has revised downward its predictions of growth in the UK economy.

Employers’ mouthpiece, the CBI, has revised downward its predictions of growth in the UK economy.

Whilst the government has recently reduced its predictions of economic growth to between 1.75% and 2.25%, the Confederation of British Industry expects growth to be at the lower end of this range.

The CBI predicts economic growth to be 1.8% in 2008 and just 1.7% in 2009.

Tighter controls on credit, rising food and energy prices and a reduction in both domestic and global demand whilst people "tighten their belts" are all affecting growth.

The CBI, who are constantly calling for interest rates to be cut to make business more competitive, believe that slow growth will ultimately affect inflation which currently stands at 2.5% from February’s figures. They predict an increase in inflation to 3.2% by Q3 of 2008 and yet believe that the slow growth will eventually bring inflation down, allowing the Bank of England to trim interest rates.

Interest rates, they believe, would be cut this year (in Q2 and Q4) despite the threat of high inflation and the BoE’s reluctance to make cuts with high inflationary pressures and eventually come down to 4.5% in early 2009.

Even with the figures being revised downwards they still indicate growth, albeit not as healthy as the UK economy has recently experienced.

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