Bleak Prospects for Next Year; ECONOMY: CBI Does Not Expect Real Signs of Recovery until 2003
BUSINESSES face more pain next year despite forecasts that the UK economy will avoid outright recession, according to the CBI.
It expects a recovery in 2003, but believes fortunes here will hinge on how quickly the US economy recovers.
Publishing its latest quarterly economic forecasts yesterday, the CBI said growth would average 2.3pc this year but slow to 1.7pc in 2002.
It expects economic growth to rally in 2003, averaging 2.6pc.
The outlook for 2002 has been revised down by 0.8pc since August's forecast, because of the impact of events on September 11.
While manufacturing will continue to bear the brunt of the slow-down, household consumption - the main driving force of the economy - is expected to slow from 3.9pc to 1.9pc.
Ian McCafferty, the CBI's chief economic adviser, said the UK was still the fastest growing of the G7 countries and well placed to weather the storm.
But he added, "There will be a painful slowdown into next year, but the UK economy is set to avoid outright recession. The real pressure will be on businesses that are exposed to the international environment, which will exacerbate the two-speed economy. …