Risks to UK growth tilted to the downside
The CBI says it expects UK economic growth to rally in the second quarter of 2015 after a “surprisingly soft” increase of 0.3% during the first three months of the year. Thereafter rates should increase by 0.6% taking the CBI’s forecast for 2015 overall to 2.4% (2.7% previously).
Nonetheless, the Confederation warns that risks to UK growth are tilted to the downside. A messy resolution of the Greek crisis could spark financial market and exchange rate volatility which could spill over into the real economy.
Uncertainty ahead of the EU referendum could also impact its forecast because of reduced sentiment and a delay in investment spending. On the domestic front, the risk of weaker-than-expected productivity growth continues to pose a threat to achieving durable economic growth, the CBI says.