BRITAIN’S biggest business body said today that it believes the economy will grow healthily for the remainder of the year, after stalling in the first three months.
To the surprise of most economists, the UK economy grew by just 0.3 per cent from January to March, its slowest rate since 2012. If it continued expanding at that rate, economic growth would barely surpass 1.2 per cent this year.
Yet the Confederation of British Industry (CBI), which represents around 190,000 firms, believes this will be a blip.
It predicts the economy will bounce back to grow by 2.4 per cent this year. The rebound is expected to be immediate, with the business body anticipating 0.8 per cent growth in the economy from April to June.
“The recovery has built up a good head of steam and we expect to see solid, steady and sustainable growth carrying through into next year,” said CBI chief John Cridland.
“Our members are feeling more upbeat than some of the recent official numbers suggest, with our surveys showing that retail and the service sectors in particular are performing strongly.”
“Businesses on the ground are seeing a pretty solid recovery. Business investment is making a strong contribution to growth, while solid consumer spending is being underpinned by rock bottom inflation, low interest rates and rising incomes.”
Despite growth prospects looking healthy at home, the CBI warned there are headwinds to the recovery, with a still sluggish Eurozone and renewed uncertainty over Greece’s economic future.
The Eurozone is the UK’s biggest export market and its failure to achieve a sustained economic recovery from the 2008-09 dip has impacted the UK’s trade balance, the difference between exports and imports. This has acted as a drag on growth.