According to the Confederation of British Industry´s (CBI) latest quarterly forecasts the British economy will grow slightly more than had been previously estimated both this year and the following.

However, it has also sounded a note of caution as regards the risks emanating from the Eurozone as well as those linked to higher than expected inflation.

Thus, UK growth is now expected to be flat this year, going on to show a modest pick-up throughout 2013 with an expansion of 1.4% and of up to another 2% in 2014. Its previous forecasts -made in August- called for a contraction of 0.3% this year and growth of 1.2% the next.

Nevertheless, the CBI goes on to say that the external risks -mainly from the Eurozone crisis- to the outlook are likely to continue.

Thus, the weak outlook for Eurozone growth continues to depress export prospects, it holds. Even so, net trade is being called to rise by 3.5% in 2013, after being flat this year (-0.1%), as conditions in the global economy improve.

As well, "consumer price inflation is now likely to be somewhat higher than previously forecast through 2013 as a result of greater upward pressure than previously anticipated in the coming months from rises in utility prices. But nevertheless we still expect inflation to be close to the 2% target by the end of next year, given subdued underlying conditions," the business lobby explains.

The labour market is expected to "improve steadily" beginning in the second half of 2013. That despite the fact that uncertainty on the international front is likely to continue to act as a restraint to business investment growth. The latter is expected to remain modest, at around 3.8% this year and 5.0% in 2013.

For his part, John Cridland, CBI Director-General, said: "(...) While we expect underlying momentum to pick up modestly next year and to be slightly stronger in 2014, the pace will remain relatively lacklustre."

Lastly, without the impact of one-off distortions in the fourth quarter of 2012 then quarter-on-quarter growth is expected to be only marginally positive (+0.2%).

AB

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