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CBI cuts UK growth forecasts

The CBI has cut its growth forecasts for the UK and warned of further risks to the economy but said the government should not delay its push to fix the public finances.

The CBI predicted growth of 2.4 and 2.5 per cent in 2015 and 2016 respectively, down from forecasts of 2.7 and 2.6 per cent it made in February due to the risks posed by a possible “messy” end to the Greek crisis and uncertainty over the EU referendum.

Although the CBI has joined other forecasters in cutting back its outlooks for the UK economy, it believes the weakness will prove to be short-lived, describing this as a “temporary blip,” since the downgrade was also prompted by weaker than expected quarterly data from the Office for National Statistics that was likely to be a glitch, and is no reason for the Conservatives to reconsider another round of cuts as it believed the UK economy was on a “firm footing.”

“Members that we have met up and down the country are feeling pretty upbeat,” said John Cridland, the CBI’s director general. “We don’t want the government to ease off on austerity. We want the government to continue to tackle the deficit in the public finances but to do so in an intelligent way,” he said.

“After five years of spending cuts, the government now needed to focus on “more imaginative” public service reforms including making savings by devolving powers to local authorities.[1]”

The CBI forecast came as accountancy firm and services group BDO said UK manufacturing firms’ confidence had seen its sharpest drop in two years, citing that the CBI forecast came as accountancy firm and services group BDO said UK manufacturing firms’ confidence had seen its sharpest drop in two years.

Chancellor George Osborne is due to announce new plans for tackling the deficit on July 8 after his Conservative Party won a national election last month.

[1] William Schomberg, Business News, Reuters