"Our forecast shows encouraging signs that business investment and net trade are starting to play their part"
- John Cridland, CBI Head
The Confederation of British Industry, the U.K.'s leading business group, revised its growth forecast upwards for the U.K. economy as it is poised to pick up steam from business investment on low borrowing cost, and net trade is set to rise this year. However, it expressed concerns about political uncertainty as the country enters an election campaign. The business lobby expects a 2.6% growth this year, compared to its November forecast of 2.4%, which reflects better than expected economic performance at the end of 2013.For the next year the CBI projects 2.5% expansion, down from 2.6% forecast made earlier.
Business investment will positively contribute to the economic growth this year, increasing at the fastest pace since 2007. After falling 3.7% in 2013, business investment is estimated to increase 6.6% this year and 8.3% in 2015. Also, the CBI projects the nation's unemployment rate to have already reached the Bank of England 7% goal in the last quarter of 2013. The jobless rate is expected to decline further to 6.8% in 2014 and 6.6% by the end of 2015. However, despite such a positive economic performance, the group sees no potential of an interest rate hike until the third quarter of 2015, when it is forecasting the first 0.25 percentage point increase.
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