CBI: Economic growth to slow

News Article - 18 June 2007
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The Confederation of British Industry (CBI) has forecast that economic growth may slow next year on the back of rising borrowing costs.

According to the organisation, interest rates are likely to increase to 5.75 per cent later this year, with a reversal to 5.5 per cent by the end of next year.

While the annual growth rate is currently 2.9 per cent, experts at the CBI predict that next year's growth will slow to 2.4 per cent.

"The economy will still enjoy above trend growth this year, with consumer spending remaining robust until the full effect of higher rates is felt later this year," said CBI chief economic advisor Ian McCafferty.

However, he added: "Higher borrowing costs will make economic growth slightly weaker next year as consumer spending is reined in."

Meanwhile, a recent study by Lloyds TSB found that the number of firms feeling optimistic about the UK's economy has now fallen to 46 per cent from 55 per cent in April.

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