Good news – CBI revises GDP growth forecast up to 1.2% for 2013

It’s Monday, the sun is shining, and there’s some good news in the air: the CBI has increased its growth forecasts for the UK economy this year and next.

The business group now forecasts GDP growth of 1.2% in 2013, up from the 1% it had predicted in May. The revision upwards is thanks to “a better-than-expected second quarter and signs of a pick-up in confidence across a broad range of sectors, including services, construction and manufacturing,” the CBI said in a statement.

The CBI expects our economy to grow 2.3% in 2014, up from the 2% it forecast in May. The growth will come from higher levels of disposable income and increases in business and housing investment.

The CBI warned, though, that the rebalancing away from consumption towards trade and investment is taking longer than expected. It believes export growth will increase from 0.7% in 2013 to 4.9% in 2014, but the net contribution of that trade will still “remain muted”, because the pick-up in consumer and business demand here will push up imports.

It expects business investment to grow by 7.3% in 2014, up from the -2.8% it’s predicting for 2013.

The business organisation believes that the Bank of England’s forward guidance will add to the recovery in confidence among companies and consumers.

John Cridland, CBI director-general, said: “The economy has started to gain momentum and confidence is picking up, but it’s still early days.

“We need to see a full-blown rebalancing of our economy, with stronger business investment and trade before we can call a sustainable recovery. We hope that will begin to emerge next year, as the eurozone starts growing again.

“The government needs to get behind talented UK businesses to help them break into new export markets and sell great British products and services around the globe.”

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