The economy will grow 3% in 2014, up from a previous forecast of 2.6%, according to the Confederation of British Industry (CBI).
This higher growth means that the business group has brought forward its estimate of an interest rate rise. It now expects interest rates to increase from 0.5% to 0.75% in Q1 2015.
Key figures from the CBI’s Economic Forecast:
- GDP will grow by 2.7% in 2015
- Despite predictions that business investment will grow, it will be 4% below its 2008 peak by the end of 2015
- CPI inflation will average 1.8% in 2014 and around 2% in 2015.
However, John Cridland, director general of the CBI, warned that “political risks” must not jeopardise economic stability.
“The recovery is advancing after a strong performance in the first quarter of 2014. Prospects are bright and we expect the recovery to broaden out this year, with greater support from business investment in particular.
“Businesses recognise the realities of election time but want all parties to ensure their policies make a positive difference. Politicians must be wary of the risk of headline-grabbing policies that weaken investment, opportunity and jobs.”
