THE Confederation of British Industry has warned that growth will remain “relatively lacklustre” for the next two years but said it no longer believes the UK economy will contract this year.
The business lobby group upgraded its forecast for gross domestic product to 0 per cent for 2012, from a previous forecast of a fall of 0.3 per cent, and now expects growth of 1.4 per cent for 2013, up from 1.2 per cent, and up to 2 per cent in 2014. However, it is worried that the continued uncertainty in the eurozone will knock confidence for some time to come.
The CBI forecast comes after official figures estimated a 1 per cent bounceback to GDP growth in the third quarter, ending the longest double-dip recession since the 1950s. CBI director-general John Cridland said: “Despite the better than expected third quarter performance, the UK economy has bumped along the bottom this year, with overall growth fairly flat.
“While we expect underlying momentum to pick up modestly next year and to be slightly stronger in 2014, the pace will remain relatively lacklustre.”
The CBI warned that risks to the economic outlook remain on the downside with the threat of the eurozone crisis and inflation now likely to be higher than previously forecast through 2013 as a result of rises in utility prices.