UK recovery ‘sluggish' in 2011-CBI

The CBI predicts the UK economy will grow at a slightly faster rate than expected in 2010, but growth will be more ‘sluggish' than previously thought in 2011 thanks to the emergency budget.

The CBI's latest forecast says the economy will grow by 1.6% this year, a 0.3% increase on its June forecast, due to better than expected Q2 growth. However, the GDP forecast for 2011 has been revised down from 2.5% to 2.0%, taking into account the measures revealed in the emergency budget. Consumer spending is set to be weak in 2011 due to high inflation, which is expected to stay above 2% until 2012. This will be caused by the VAT rise in January and low wage increases, according to the forecast. Despite this, the CBI says a double dip recession is unlikely. "The degree of uncert...