CBI predicts faster growth for UK economy

In its latest economic forecast, the lobby group predicts that the UK economy will grow by 1.3 per cent in 2010, up from one per cent in its March forecast.

The slight upward revision is said to reflect the relative strength of the economy over recent months, with industrial production showing solid growth and overseas demand for UK-made goods strengthening, buoyed by the relative weakness of sterling. The GDP forecast for 2011 remains unchanged at 2.5 per cent.

Quarter-on-quarter growth

After posting first-quarter growth of 0.3 per cent this year, the CBI expects the economy to grow by 0.8 per cent in the second quarter, followed by slower rates of 0.5 per cent and 0.4 per cent in the latter half of 2010. Quarterly growth is then forecast to pick up slightly from 0.6 per cent to 0.8 per cent over the course of 2011.

However, the outlook remains uncertain, particularly with government spending expected to fall sharply, as much-needed steps to restore the public finances are taken in the forthcoming emergency Budget.