CBI issues UK growth warning

CBI issues UK growth warning

The Confederation of British Industry (CBI) has warned UK growth could be sluggish for two years, as it revised its outlook for the UK economy.

In its economic outlook documents, the industry body said it expects UK GDP growth to be 1.5 per cent this year and next, and 1.3 per cent in 2019, the year the UK is scheduled to leave the European Union.

Rain Newton-Smith, chief economist at the CBI said she expects domestic demand in the UK to remain weak, dragging on the level of economic growth that can be achieved.

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Ms Newton-Smith said household spending power will remain squeezed by higher inflation.

The CBI conducted a survey which found that the outlook for the UK economy is the number one reason for consumers being concerned about the outlook for the economy.

In contrast the CBI revised upwards its outlook for the Eurozone economy, anticipating growth to strengthen from here.

It also expects the global economy as a whole to grow from here.

Edward Smith, head of asset allocation research at Rathbones, said he noted the recent steep improvement in global economic data, and said he is “not sure it is sustainable.”

He doesn’t believe a recession is imminent but is only “neutral” in his outlook for global equities.