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Thursday 2nd October 2014
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CBI Forecasts Economic Growth Slowdown

Thursday, 4th September 2014 06:46

The CBI has forecast a slowing of economic growth during the second half of the year - weighed down by flatter confidence and uncertainties over the Scottish referendum.

The business lobby group predicted UK GDP growth would ease to 0.7% in the third quarter and 0.6% during the final three months of the year, after growth of 0.8% in each of the first and second quarters.

It said its expected slowdown also reflected weakness in productivity and wage growth, though average earnings would soon start to rise - by 1% this year.

CBI director-general John Cridland said: "The UK's recovery is on solid ground, with our quarterly growth on average outstripping G7 competitors over the last year.

"For the rest of the year, we expect growth to get onto a more even keel and the recovery to become further entrenched next year.

"Business investment has been growing better than expected so far this year, but it still has a lot of catching up to do to get back to its pre-crisis level.

"Although hundreds of thousands of new jobs are being created in the economy, there is little upward pressure on starter salaries outside a few hot spots, such as in parts of the IT sector.

A separate CBI survey showed economic growth slowed in the three months to August.

Mr Cridland said heightened tensions in Ukraine and the Middle East added to risks such as higher commodity prices and global market instability.

He described the possibility of a Yes vote in the Scottish independence referendum on September 18 as "the most important risk that the CBI and business are facing".

"The economic case for Scottish independence has not been made," he said.

"Overwhelmingly, British business believes that the UK should stay together."

Deputy director-general Katja Hall added: "It is a one-way ticket to uncertainty and there is no return."

In another development, the CBI also confirmed a story by Sky News that it was launching a "great business debate" to highlight the positive contribution made to society, as well as to answer public concerns on issues such as wages, diversity and tax contributions.