TORY hopes of sweeping to general election victory next year on the back of an economic feel-good factor are boosted today by optimistic forecasts from two leading business groups.
Katja Hall was positive about the economy in her speech[PH]The Confederation of British Industry (CBI) said the UK economy is now growing faster than for more than a decade.
The British Chambers of Commerce (BCC) also upgraded its 2014 growth forecast to a seven-year high.
The CBI’s growth survey of hundreds of firms in May gave the strongest reading since 2003.
It expects the pace of growth to remain above average after positive indications from retail sales, business, professional and consumer services and manufacturing.
CBI deputy director-general Katja Hall said: “The UK economy is performing strongly thanks to rising business and consumer confidence, better credit conditions at home and improving global economic conditions.”
However, she warned: “There are risks to the UK’s outlook from global developments, including the possibility that the situation in Ukraine and Russia could impact on global commodity prices.
The UK economy is performing strongly thanks to rising business and consumer confidence, better credit conditions at home and improving global economic conditions
"With the eurozone crisis still far from being fully resolved, the UK continues to be exposed to a prolonged period of subdued activity in the region.”
The BCC upgraded its growth forecasts for 2014 from 2.8 to 3.1 per cent, the first time since 2007 that it has been above three per cent.
Next year it expects growth to be 2.7 per cent, up from its previous 2.5 per cent prediction.
However, its growth forecast for 2016 remained unchanged at 2.5 per cent.
The growth slowdown in 2015 and 2016 is largely due to expectations that official interest rates will finally start rising from their historic 0.5 per cent low.
John Longworth, BCC director general, said: “To sustain investment momentum into the future the Government and the Bank of England need to give businesses the confidence they need to invest.
“We urge the Bank of England to keep official interest rates low for as long as possible, and ensure that future rate rises are gradual and modest.
"Everything possible must be done to avoid slower growth in future.”
Separate survey results from Markit Economics showed some 17 per cent of mortgage holders fear there would be a “very significant” impact on them from a loan rate rise, which nearly a quarter now expect.
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