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CBI predicts return to growth in Q3 2012
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The UK economy may have dipped back into recession during Q1 2012, but the Confederation of British Industry (CBI) believes a return to growth is just around the corner.
According to the business lobby group, gross domestic product (GDP) growth will return in Q3 2012 with 0.7 per cent growth, followed by a 0.5 per cent increase in Q4.
And the pace of economic recovery is set to pick up in 2013, with a 2.0 per cent expansion set to be seen over the course of the year, the CBI predicted.
The CBI said quarter-on-quarter growth is likely to be flat in the second quarter of 2012, affected by the impact of the additional bank holiday for the Diamond Jubilee.
However an improving global economy, an expected easing in inflationary pressures and the staging of the Olympic Games will boost UK GDP in the second half of the year.
John Cridland, director-general of the CBI, said despite the disappointing Q1 2012 GDP figures, the organisation remains confident of growth in 2012.
"Optimism among businesses has been increasing since the turn of the year, with manufacturing demand holding up. And that is beginning to translate into more jobs and investment," he commented.
“That said, the global economy continues to pose a number of significant challenges. Concerns over eurozone stability are on the rise again, oil prices remain high and confidence among businesses and households is still fragile."
Mr Cridland claimed the path back to sustainable economic growth will be "a long and difficult one", with many bumps along the way.
"To re-balance our economy towards exports and investment will take time and patience," he claimed.
Ian McCafferty, chief economic adviser at the CBI, said the economy has been "bumping along the bottom" over the winter.
"With the distortions from an extra bank holiday in the second quarter, is likely to stay that way until summer," he added.
"Nevertheless, business surveys suggest that underlying conditions are starting to improve, and that we should see more momentum in the second half of the year," he stated.
Posted by Stephen Wilkinson
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