The Confederation of British Industry, representing the nation's major manufacturers, predicts that the UK will avoid recession in what remains of this year, moving to a broadly-based recovery in 2002.
Even the reeling manufacturing sector is expected to benefit from the twin effects of a stronger world economy and the weakening pound sterling. Furthermore, the generous public expenditure plans announced by the Blair administration will help thrust recession out of the national frame.
Says CBI associate director of economic analysis Sudhir Junankar: “Our central view is that we do not expect a whole-economy recession. Next year’s economic recovery will be driven by home demand led by the consumer and supported by higher government spending.”
The organisation forecasts overall growth in 2001 at 2%, slightly below the long-term average. Unemployment is likely to be kept in check despite the global trend and the CBI predicts it will rise by no more than 30,000 come the year end.
Next year, the CBI crystal ball envisions that growth rates will obediently toe the British Treasury line at 2.5% – assuming a further quarter-point reduction in interest rates by the Bank of England.
According to CBI director-general Digby Jones: “We would expect to see interest rates at 4.75% by the end of the year, if not sooner. With inflation set to stay below target, there is no obstacle to a cut.”
News source: The Times (London)