UK Employers Slash Economic Growth Forecasts

17 June 2008

LONDON: UK business leaders are warning of the slowest economic growth since the dark recessionary days of the early 1990s.

The Confederation of British Industry, which lowered expectations for GDP for 2009 from 2.1% to 1.7% in March, has revised down the numbers again to 1.3% as fuel and food prices make increasing demands on the nation's households.

The country's biggest employers' lobby group forecasts that inflation will peak at 3.8% in the third quarter of this year and will not fall below 3% until the end of Q1 in 2009.

The CBI steers clear of predicting a recession but warns of a "very prolonged period of very sluggish growth".

Declares the group's director general Richard Lambert: "The oil price has continued to rise strongly, roughly doubling since the spring of 2007.

"This has squeezed household incomes and companies' profit margins, and has also made it much harder for the Bank of England to cut interest rates in the face of the economic slowdown.

"Our best bet is still that there will be a measure of economic growth in 2009. But the outlook has deteriorated in recent months, and considerable uncertainties remain."

Data sourced from BBC Online; additional content by WARC staff