The Confederation of British Industry (CBI) has cut its growth forecasts for the UK economy but believes it should avoid falling back into recession. The UK's leading business lobbying organisation said the economy would barely grow this winter and expand much less than previously expected this year and next due to the crisis in the euro zone, which has led to a drop in business and consumer confidence. The group cut its estimates for gross domestic product (GDP) growth to 0.9% in 2011 and 1.2% in 2012, down from 1.3% and 2.2% respectively. It said the economy should grow by 2.2% in 2013. It also now forecasts that quarter-on-quarter GDP growth will be flat in the final quarter of the year and 0.2% in the first three months of 2012. Despite cutting its growth estimates it called on the Chancellor to stick to his deficit-reducing austerity measures and urged George Osborne to boost growth by attracting £200bn of private sector investment over the next five years. John Cridland, CBI director general, said: “The Government must stick to its plans to bring down the deficit to maintain confidence in the UK’s public finances and keep the cost of borrowing down, but now is the time to revitalise its growth strategy and create a ‘Plan A plus’.”

Topics