Leading business association the CBI has today suggested that the UK economy may take much longer to recover on the path towards solid economic growth, downgrading previous growth forecasts for 2011 by 0.5% in light of the government’s ongoing austerity measures and the sluggish economic recovery thus far.
The CBI forecasts for GDP growth over the course of 2011 have been revised from 2.5% to 2%, highlighting a considerably slower pace of growth as the UK continues to struggle to overcome the effects of the global recession.
It also drew reference to the forthcoming VAT rise, which it felt was likely to have an adverse impact on consumer spending, while a static, high rate of inflation remained a further concern for the short to medium-term outlook.
The announcement comes following official government growth figures which point to a modest growth in the economy of 1.6% for the first half of 2010, with a rate of 0.9% expected as we move into 2011.
The CBI also anticipated a rise in unemployment over the coming twelve months, suggesting levels could peak at over 2.7million by the middle of next year.
However, some analysts suggest that the benefits of a growing private sector could help mop-up the difficulties associated with public sector cutbacks, and while demand in the construction and export sectors remain low businesses could anticipate a more favourable outlook as a result of increasingly business-friendly central policy.