The economic slowdown could bite deeper than has been previously predicted, the CBI has warned.
The latest quarterly outlook from the CBI has seen the employers' organisation downgrade its forecast for growth in 2008 from 2 per cent to 1.8 per cent.
In 2009, things could be even tougher, the CBI said, with its predicted rate of growth trimmed from 2.1 per cent to 1.7 per cent.
Growth in consumer spending is all set to be even weaker, forecast to drop to 1.6 per cent this year before tumbling to 1.1 per cent next. This, the CBI argued, would have the effect of redressing the balance of the economy in favour of exports, supported by the relatively low value of sterling.
Inflation, on the other hand, looks set to rise to 3.2 per cent in the second half of 2008 before slipping back.
However, the CBI said it also forecast that interest rates would be lowered to 4.5 per cent by the first quarter of 2009.
Richard Lambert, the CBI's director general, said of the recent turbulence in the world's financial markets: "We are facing a financial shock on a scale not experienced in recent times, which is coming on top of already slower growth."
Despite this, Mr Lambert insisted that trading conditions in many business sectors remained comparatively strong.
He said: "Outside the financial and property sectors, the mood of business is, however, nothing like as gloomy as you might guess from reading today's headlines."
Date:25 March 2008
|
