The Business Lobby Group has raised its growth projections for this year as well as the following one, pointing to the economy’s stronger than expected performance in the third quarterof 2013, where it increased by one percent, as reported by The Telegraph.
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The CBI declared that the data indicated that the economy had started to show signs of an increase earlier than would have been expected.
The CBI is now expecting that the economy will be flat in 2012 and not shrinking 0.3pc in the previous year, and also to expand to 1.4pc in 2013, instead of 1.2pc predicted in August. The CBI also made its first forecast for UK economic growth for 2014 which was set at 2 percent for the year in the context of households’ spending, trade and investment are all expected to contribute the “stronger contribution” to the economic growth.
John Cridland, the CBI’s director general, stated that although it is true that the UK “will have to get used to steadier growth” rates than the ones it has experienced previously, it is not necessarily that it will be a “decade of Japanese-style experience”. Japan was notoriously a victim of an “lost decade” of stagnation during the 1990s.
Although the Eurozone’s debt crises are being viewed as a significant threat for the UK economy however, the CBI anticipates it is more likely that the politicians can hold the eurozone’s currency union. The CBI expects UK interest rates beginning to increase in the second quarter of 2014, when growth is increasing and inflation moves toward the target of 2pc.
The lobby group considered that there was more need for government action to boost the economy.
Mr Cridland cautioned that not all of UK’s economic growth comes from the capital city and its surrounding areas.
The UK isn’t spending enough in infrastructure, he claimed. The autumn statement of the Chancellor next month should “book-end the delivery, execution, the momentum of infrastructure as the main thing Government can do to help economic growth”.
The upcoming Energy Bill, which should provide businesses with “certainty” on policy, should also be released in time and received Royal approval in the year 2013. He stated.