The CBI has cut its UK growth prediction as squeezed household budgets, weak wage growth and high inflation pour cold water on the recovery.
The CBI expects GDP this year of 1.7%, down from its previous forecast of 1.8%. Next year it predicts growth of 2.2%, a cut from February's forecast of 2.3%. It said UK growth will get a boost from exports and business investment will also help drive economic growth. However, public spending cuts, the volatility of oil prices, and the impact of the earthquake in Japan on UK supply chains all weigh on the CBI forecast. It suggested "modest" interest rate rises are likely from Q3 2011 through to mid-2012, with rates hitting 2.5% by Q4 2012. Ian McCafferty, the CBI's chief econo...
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