The UK economy will continue to grow throughout this year, with GDP growth expected to pick up in 2014, but challenges remain, according to the CBI.
The trade organisation is forecasting GDP growth of 1% in 2013, unchanged from its previous forecast after official first quarter figures came in line with its expectations.
Quarter-on-quarter growth is expected to gather pace gradually. The CBI is forecasting growth of 0.3% in the second quarter, 0.4% in the third and 0.4% in the final quarter of 2013.
Next year, it is expecting growth of 2%, with quarter-on-quarter growth to range between 0.5% and 0.6%.
John Cridland, CBI director-general, said: “The UK economy is moving from flat to growth. Although recent data suggests rising business confidence, the economic climate remains tough, hampering demand here and overseas. Meanwhile, consumers remain under pressure, as inflation continues to outstrip wage growth.”
He added that the Government should now “deliver on promises to get finance to firms, cut red tape and help drive up exports.”
According to the CBI, unemployment will see a small rise in 2013 to 2.58 million before receding slightly to 2.51 million in 2014.
Inflation is expected to peak in the second quarter of 2013 (3.1%) before starting to fall steadily for the rest of the year though remaining above target throughout 2014 (2.5%).
Uncertainty in the eurozone and the muted international outlook is limiting business investment intentions this year.
Eurozone growth continues to have a negative influence on UK export prospects with an indifferent performance anticipated in 2013 (0.4%). An upturn in fortunes is expected throughout the next year with 5% growth.
