A leading business organisation has moved to lift some of the gloom hanging over the UK economy by forecasting a “pick up” in the recovery over the rest of the year.
The CBI yesterday cut its growth forecast for 2012 to 0.6 per cent, from 0.9 per cent estimated in February, after official figures revealed the economy fell back into recession in the first three months of the year.
But the lobby group, which represents some 240,000 UK companies, insisted optimism among businesses had been increasing and manufacturing demand had held up, pointing towards increased momentum in the second half of the year.
A slide in construction output and a weak services sector were blamed for a surprise 0.2 per cent dip in gross domestic product between January and March, which, after a fall of 0.3 per cent the previous quarter, caused the UK’s first double-dip recession since the 1970s.
John Cridland, CBI director-general, said: “We have always said that the path back to sustainable economic growth will be a long and difficult one, with many bumps along the way.
“To re-balance our economy towards exports and investment will take time and patience.” He added: “Optimism among businesses has been increasing since the turn of the year, with manufacturing demand holding up – and that is beginning to translate into more jobs and investment.”