Thursday, February 10, 2011

CBI cuts down on their forecasts on growth after fall in GDP

Confederation of British IndustryToday, The Confederation of British Industry is reducing its forecasts for UK economic growth. They declared that the unexpected fall in gross domestic product in the fourth quarter of 2010 suggests basic economic expansion may have been weaker than previously assumed.
And it further expects that unemployment, on the International Labour Organization (ILO) measure, will rise throughout this year and go up higher than it thought previously at 2.71 million by the end of 2011. It will remain persistently high.
CBI forecasts that ILO unemployment will be at two million and six hundred and forty thousand by the fourth quarter of 2012, considerably higher than the latest available figure of two and a half million for the month of September to November period last year.

The CBI had forecast as recently as December that unemployment would go up close to two million and six hundred thousand by the end of this year, and fall below two and a half million by the fourth quarter of 2012.

CBI has predicted this year’s economic growth to be around 1.8%, down from the two percent it projected in its previous forecast in December.

This is a considerable amount of shift from the economy’s long-term trend growth rate of about two and a half percent to two and a three fourth percent per annum and weaker than the forecast of 2.1% expansion in 2011 from the independent Office for Budget Responsibility, established by Chancellor George Osborne.

The CBI is cutting down its forecast of growth in 2012 from 2.4% to 2.3%, which it pointed out would be rather submissive during this time of recovery. The OBR is forecasting growth of 2.6% in 2012.

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