The CBI warns that the UK is likely to experience slow growth in 2011-2012 but says neither firms nor employees should be overly-pessimistic
CBI director-general John Cridland and chief economic advisor Ian McCafferty spoke to journalists at a press conference on Friday last week, giving a detailed economic forecast and explaining the CBI’s opinion on how best to move the economy forwards to pre-recession growth.
Despite the Japanese tsunami’s global impact on automotive supply chains, the spiralling US public debt and current unease over the rate of inflation in China, the CBI maintains its prediction that the economy will grow by 1.3% this years – down from its prediction of 1.7% made in May. Individuals inside the organisation predict that there will be GDP growth of 2.2% in 2012 – unchanged from the May forecast.
According to a recent CBI report on industrial trends, many in the manufacturing sector have lost confidence in their markets and are reappraising business plans; reducing workforce size and scrapping plans for investment.
Cridland explained his view that among all the recent events, the one that causes him real concern is the turbulence in the Eurozone economy. “We’re starting to see supply chains recover in the wake of the Tsunami – the one to watch is the current trouble in the Eurozone,” he said.
Speaking more generally of the sluggish economic conditions Cridland continued,“It may be a lacklustre recovery, but with solid net trade contributions and the positive impact of business investment, the UK will remain on a solid track growth,” he added.
The CBI expects exports to play a large role in boosting the economy on the road to recovery, and it also expects reliance on imports to gradually decrease.
Putting his organisation’s predictions into context for British households and British workers Mr McCafferty warned: “Economic conditions will be very tough for the rest of this year as household budgets continue to be squeezed by a combination of inflation and weak wage growth. But conditions will be a little brighter in 2012 as inflation eases back and take-home pay improves.”