CBI Adds to Economic Gloom by Cutting Growth Forecasts
Philip Thornton Economics Correspondent, The Independent (London, England)
The CBI, the UK's largest business lobby group, slashed its forecasts for economic growth over the coming two years and changed its view on interest rates to say the next move would be down.
It said the economy would grow by 2.5 per cent this year slowing to 2.3 per cent in 2006, down from 2.7 and 2.6 per cent respectively in its February forecast.
'The central message is that the economic outlook has weakened since February,' said John Cridland, its deputy director-general. 'The UK economy has undoubtedly slowed and consumer spending is undoubtedly down as interest rate rises are having an impact.'
It cut its forecasts for consumer spending to 2 per cent this year from its previous estimate of 2.2 per cent and last year's 'bumper' rise of 3.3 per cent.
Doug Godden, its head of economic analysis, said: 'There is a possibility of seeing a more abrupt slowdown in consumer spending mainly related to feelings about the housing market.
'If we were to see a decline [in house prices], that would lead to consumers becoming much less willing and less able to borrow and we would then see consumer spending more constrained. …