20/06/17

UK economy set to grow faster than expected this year, says Confederation of British Industry

The Confederation of British Industry on Tuesday bumped up its forecast for economic growth in Britain, reflecting strong momentum towards the end of last year rather than any fundamental change to its view, reports Reuters.

Britain's economy looks on course to grow 1.6 per cent this year and 1.4 per cent in 2018, compared with forecasts made in November for 1.3 per cent and 1.1 per cent, the CBI said.

The CBI's forecasts predate the 8 June general election in which Prime Minister Theresa May lost her majority in parliament, throwing Britain into one of its worst political crises in decades.

 “Even accounting for weaker growth at the start of 2017, the momentum from last year gives us more of a lift as we move ahead,” said Rain Newton-Smith, CBI chief economist.

Like the Bank of England, the CBI's forecasts rely on a “smooth” transition as Britain leaves the European Union.

It expects quarter-on-quarter growth rates of around 0.3 to 0.4 per cent through to the end of 2018, roughly half the average seen since 2013.

“Very little has changed in our view of the nature of the outlook. Growth will be slower in the years ahead as living standards are hit by rising inflation; and after some initial strength, uncertainty will weigh on business investment,” Newton-Smith said.