"The economy has started to gain momentum and confidence is picking up, but it's still early days"
- John Cridland, the CBI's director general
Amid growing signs of economic revival, the influential economy watcher the Confederation of British Industry (CBI) has revised up its growth forecast for the next two years, as both business and consumer confidence strengthened, while credit conditions improved. The business lobby's quarterly forecast sees a 1.2% expansion this year- double the pace predicted by George Osborne in March, while for 2014 it projects a 2.3% growth. Furthermore, the unemployment rate, which is considered by the Bank of England as the key indicator for its guidance on monetary policy, is likely to fall to 7.6% next year, after staying around current level this year. The CBI becomes the latest organization to upgrade its outlook for the country, after a bunch of surveys and official data indicated green shots of recovery.
Earlier this month, the National Institute for Economic and Social Research and forecasters Fathom Consulting both upgraded their economic outlook to 1.2%. The CBI, however, also warned that a return to growth in the neighbouring Eurozone and global recovery will give a boost to exports, while imports is also expected to grow as domestic situation improves, meaning the trade contribution to growth will remain muted. Meanwhile, the economy needs to rebalance through increased business investment and trade in order to ensure a recovery will become sustainable.
© Dukascopy Bank SA