The British economy will not recover to ‘normal’ growth until 2003, predicts the Confederation of British Industry.

UK economic growth will total only 1.7% in 2002 (slashed from earlier forecasts of 2.5% due to the September 11 fallout), before rising to 2.6% the year after, the CBI said in its latest report. Such recovery will be jeopardised, however, if other major global economies do not improve within a similar timescale.

Commented Ian McCafferty, the CBI’s chief economic adviser: “We should see the economy start to rally towards 2003, but the strength of this relies heavily on the timing and momentum of the recoveries in the US and Europe.”

Although the report concludes that Britain will avoid recession, manufacturing will continue to slow next year, while consumer spending growth will drop from 3.9% in 2001 to 1.9%. The CBI also predicts just one more cut in interest rates to 3.75%.

News source: BBC Online Business News (UK)