CBI: Economic recovery will kick in soon
GROWTH will restart early this year, the Confederation for British Industry’s (CBI) economic forecast predicted today, pointing to positive business survey data.
The BDO optimism index, also published today, points to a rebound from the middle of 2012.
However, the Institute for Turnaround (IfT) sounded a note of caution, arguing low consumer spending threatens to bankrupt more firms, boosting unemployment and further hurting the economy.
Following the 0.2 per cent decline registered in the first estimates of GDP for the final quarter of 2011, the CBI has trimmed its growth forecasts to 0.9 per cent for 2012 and two per cent for 2013, from 1.2 per cent and 2.2 per cent respectively in November’s forecast.
“Economic conditions will continue to be tough, especially in the first half of the year, and the UK recovery will depend on the successful resolution of the Eurozone crisis,” said CBI boss John Cridland (pictured).
“But some activity has picked up since before Christmas and the mood among many businesses has improved.”
He also argued that growing trade and business investment will boost GDP, and falling inflation will lessen the long squeeze on households.
The BDO optimism index, which indicates confidence two quarters ahead, jumped from 91.5 in December to 94.1 in January, with businesses in both services and manufacturing reporting growing optimism.
However, in the short-term the index forecasts falling turnover, and the IfT’s report said 30 per cent of firms in London and the south east are “zombies” – unable to repay debts and struggling with weak demand. It argued that such a grim situation may lead to more firms failing.