CBI revises economic growth

The Confederation of British Industry issued a revised economic forecast for the UK on Wednesday, now forecasting that the British economy will grow by 1.9 percent this year and by 2.2 percent next year.

These predictions are well below the UK government’s forecasts, issued in April, which stand at growth of 3 percent to 3.5 percent in 2005 and 2.25 to 2.75 percent next year.

The CBI is not the only group to cut its growth forecasts for the UK economy. The British Chambers of Commerce said Tuesday that they had cut their estimate of economic growth this year to 2 percent, while the Bank of England issued revised forecasts earlier this month that estimate this year’s UK economic growth at 2 percent and at 2.6 percent in 2006.

These lower forecasts are in line with data released in July by the Office for National Statistics, which said that the Gross Domestic Product had grown by 0.4 percent in the second quarter and by 1.7 percent in the first half. This was the slowest GDP growth since the first quarter of 1993.

The CBI also said Wednesday that business investment growth will only be 1.7 percent this year, less than half of last year’s 3.4 percent growth. Additionally, they said that fixed investment, which includes government investment, would grow by 3 percent this year, less than half of Treasury’s forecast of 6 percent to 6.25 percent growth.