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| CBI cuts UK growth forecast again | CBI cuts UK growth forecast again |
| (about 1 hour later) | |
| UK economic growth will slow to its lowest level since 1992 next year, employers' group the CBI has warned. | UK economic growth will slow to its lowest level since 1992 next year, employers' group the CBI has warned. |
| In March, the CBI lowered expected GDP growth for 2009 from 2.1% to 1.7%. | In March, the CBI lowered expected GDP growth for 2009 from 2.1% to 1.7%. |
| It has revised the number downwards once more, now putting expectations at 1.3%, as households tighten belts due to higher food and fuel prices. | It has revised the number downwards once more, now putting expectations at 1.3%, as households tighten belts due to higher food and fuel prices. |
| The CBI said a "very prolonged period of very sluggish growth" was in prospect for the UK but it was not predicting a recession. | |
| CBI director general Richard Lambert said: "Over the past year, the CBI has consistently had to revise down its forecasts for economic growth. | CBI director general Richard Lambert said: "Over the past year, the CBI has consistently had to revise down its forecasts for economic growth. |
| Our best bet is still that there will be a measure of economic growth in2009 CBI director general Richard Lambert | Our best bet is still that there will be a measure of economic growth in2009 CBI director general Richard Lambert |
| "The main reason is that the oil price - measured in depreciated sterling - has continued to rise strongly, roughly doubling since the spring of 2007. | "The main reason is that the oil price - measured in depreciated sterling - has continued to rise strongly, roughly doubling since the spring of 2007. |
| "This has squeezed household incomes and companies' profit margins, and has also made it much harder for the Bank of England to cut interest rates in the face of the economic slowdown. | "This has squeezed household incomes and companies' profit margins, and has also made it much harder for the Bank of England to cut interest rates in the face of the economic slowdown. |
| "Our best bet is still that there will be a measure of economic growth in 2009. But the outlook has deteriorated in recent months, and considerable uncertainties remain." | "Our best bet is still that there will be a measure of economic growth in 2009. But the outlook has deteriorated in recent months, and considerable uncertainties remain." |
| 'Firms leaner' | 'Firms leaner' |
| Mr Lambert said it was not a prediction of recession, saying that in the early 1990s a drop in consumer demand was coupled with large job cuts. | Mr Lambert said it was not a prediction of recession, saying that in the early 1990s a drop in consumer demand was coupled with large job cuts. |
| "These days, firms are leaner and more efficient and our economy's reach is far more global. We should avoid believing a recession is inevitable, or talk ourselves into unnecessary trouble." | "These days, firms are leaner and more efficient and our economy's reach is far more global. We should avoid believing a recession is inevitable, or talk ourselves into unnecessary trouble." |
| The business organisation says consumption growth will be down to only 0.7% in 2009 - also the lowest since 1992. | The business organisation says consumption growth will be down to only 0.7% in 2009 - also the lowest since 1992. |
| Inflation, which the CBI expects to hit 3.8% within four months, will limit the capacity for the Bank of England to cut interest rates and increase spending, it says. | Inflation, which the CBI expects to hit 3.8% within four months, will limit the capacity for the Bank of England to cut interest rates and increase spending, it says. |
| Ian McCafferty, the CBI's chief economic adviser, said: "The profile still suggests the UK will avoid a recession, in the sense of two quarters of negative GDP growth, but it is a very prolonged period of very sluggish growth in prospect." | Ian McCafferty, the CBI's chief economic adviser, said: "The profile still suggests the UK will avoid a recession, in the sense of two quarters of negative GDP growth, but it is a very prolonged period of very sluggish growth in prospect." |