CBI slashes UK growth forecasts

John CridlandThe CBI has slashed its growth forecasts for the economy but called on the Chancellor to stick to his deficit-busting austerity measures.

The UK's leading business lobbying organisation, which represents some 240,000 employers, urged George Osborne to boost growth by attracting £200 billion of private sector investment over five years but said it wants the Government to continue with its spending cuts and tax reforms.
The group, whose members employ a third of the private sector workforce, made the recommendations as it cut its estimates for gross domestic product (GDP) growth to 0.9% in 2011 and 1.2% in 2012, down from 1.3% and 2.2% respectively.

The revised forecasts fall below the 1.7% in 2011 and 2.5% for 2012 forecast by the Office for Budget Responsibility (OBR) at the time of Mr Osborne's Budget in March, although these are expected to be revised downwards at the end of the month.

The CBI said it had downgraded estimates after continued uncertainty in the eurozone, and the resulting weaker prospects for exports and investment, led to a marked drop in business and consumer confidence.

The CBI now forecasts quarter-on-quarter GDP growth to be flat in the final quarter of the year and 0.2% in the first quarter of 2012.

However, the organisation said it was increasingly important for the UK to hold on to its coveted AAA credit rating amid the increased volatility.

John Cridland, CBI Director-General, said: "The Government must stick to its plans to bring down the deficit to maintain confidence in the UK's public finances and keep the cost of borrowing down, but now is the time to revitalise its growth strategy and create a 'Plan A plus'."

Ahead of the Autumn Statement, the CBI is urging the Government to consider a range of measures to help kick-start growth, at "little extra cost" to the Treasury.

The group's proposals range from actions to boost investment in infrastructure, stimulate the housing market and improve the roads, to supporting energy-intensive industries, reforming the electricity markets and tackling youth unemployment.

© 2011 Press Association
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