CBI calls for ‘full-blown rebalancing’ of UK economy after lifting growth forecast

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The Confederation of British Industry has lifted its UK growth outlooks for 2013 and 2014 but has maintained calls for a “full-blown rebalancing” of the economy.

The business lobby group now expects the UK economy to expand by 1.2 per cent in 2013, up from 1 per cent in its May forecast, and by 2.3 per cent in the following year, up from its previous 2 per cent.

In its latest forecast, the CBI highlights a pick-up in confidence across the services, construction and manufacturing sectors and the expected increases in disposable income increases and business and housing investment as driving factors behind growth.

Furthermore, the group says the return to economic growth in the eurozone and general recovery on the global stage will help to lift the UK’s export levels. However, this is likely to come alongside increased demand for imports, meaning trade’s contribution to growth will remain small.

CBI director-general John Cridland says: “The economy has started to gain momentum and confidence is picking up, but it’s still early days.

“We need to see a full-blown rebalancing of our economy, with stronger business investment and trade before we can call a sustainable recovery. We hope that will begin to emerge next year, as the eurozone starts growing again.”

According to the Office for National Statistics’ most recent figures, the UK economy grew by 0.6 per cent in the second quarter of the year. In addition, business surveys from the services, construction and manufacturing sectors, as well as housing data, indicate a pick-up in economic activity.