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CBI predicts slowing of economic growth

The CBI has today issued a rather downbeat statement on the UK economy with a forecast that growth will slow down in the second half of 2010 although at the same time the CBI has increased its forecast for economic growth during 2010 from 1% to 1.3%. The figure for 2011 remains unchanged at 2.5% which is broadly in line with the UK government's understanding of the situation.

The CBI expects UK economic growth to be around 0.8% in the second quarter of 2010 falling to 0.5% and 0.4% in the final two quarters. But 2011 could be a slightly different situation with economic growth expected to improve although with the European debt saga ongoing there is concern about a potential downgrading of forecasts for 2011. In simple terms nobody is 100% certain that the ongoing European debt problem will not spill over into other areas and potentially impact the worldwide economy.

There are so many uncertainties surrounding the UK economy and the £60 billion of budget cuts announced recently could well just be the tip of the iceberg. If economic growth were to fall then government income would be impacted with further budget cuts required and an increase in taxation. All a nightmare scenario for the UK government!

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