Tuesday, August 2, 2011

UK set for low growth as the mood 'darkens'

The Confederation of British Industry (CBI) warns today that there is a "darkening mood" among British business people as they face up to years of lacklustre, disappointing and fragile economic growth.

The squeeze on household incomes and consumer spending has hit UK business confidence hard in recent weeks, as has talk about the Government's planned spending cuts and sovereign debt crises in the eurozone and in the US.

Businesses remain nervous about spending an estimated £60bn cash pile on investment plans, instead waiting to see whether the current raft of economic and political risks pass and remaining cautious in the meantime.

Only exports were really identified by the CBI as a potentially strong source of growth – up 7.7 per cent this year and set for a rise of 6.9 per cent in 2012.

In its latest economic forecasts, the CBI has cut its figure for this year from growth of 1.7 per cent to 1.3 per cent – the current consensus among independent economists. The Office for Budget Responsibility's prediction remains at 1.7 per cent. (more)