LONDON: Britain’s economy will grow 2.6% this year, exceeding earlier forecasts, as an uptick in productivity accelerates, household spending stregnthens and business investment prospects improve, the CBI has said.
The business lobby group in June predicted 2.4% GDP growth this year, but Rain Newton-Smith, the CBI’s director of economics, said “strong domestic demand and upbeat official data since our last forecast has boosted our outlook for 2015”.
It also upgraded its forecast for 2016, seeing growth of 2.8% versus the 2.5% it had intially estimated.
Despite the upgrade the CBI’s 2015 GDP growth forecast is still below the 2.8% expected by the Bank of England.
It is, however, in line with other private sector forecasts, as collected by the Treasury. And it is now higher than the 2.4% forecast by the Office for Budget Responsibility in the Budget last month.
The CBI said business investment is likely to “remain healthy” and said its surveys were pointing to robust plans for capital spending by firms for the months ahead.
It sees total business spending rising by 6.2% this year, with manufacturing fixed investment jumping to a 12.6% expansion.
