The UK economy is expected to continue to grow – but at a slower rate – through 2016 and 2017, and there are signs that global economic risks, including uncertainty ahead of the EU referendum, are starting to weigh on investment plans, according to the latest CBI economic forecast.
The leading business group’s latest quarterly forecast predicts that the UK will see 2.0% GDP growth in both 2016 and 2017, both of which are downgrades from its last forecast in February (2016 – 2.3%, 2017 – 2.1%).
Growth is again expected to be driven by household spending and investment, but the deterioration in the global economic outlook, including weaker prospects for China and other emerging markets, continue to represent major challenges.
The economy saw a softer than expected start to the year, which has contributed to a large part of the downgrade in GDP growth in 2016. There are also signs that uncertainty over the outcome of the EU referendum is having a tangible impact on the spending plans of some firms.
The CBI’s central economic forecast was carried out on the basis of our current membership of the European Union.
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Carolyn Fairbairn, CBI Director-General, said:
“We expect the UK’s growth path to continue but it is likely to be at a slower rate than previously thought.
“A dark cloud of uncertainty is looming over global growth, particularly around weakening emerging markets and the outcome of the EU referendum, which is chilling some firms’ plans to invest.
“At present, the economic signals are mixed – we are in an unusually uncertain period.”