By Dow Jones Business News, November 02, 2013, 08:15:00 PM EDT
By Jason Douglas
LONDON--One of Britain's leading business lobby groups Sunday raised its growth forecasts for the U.K. economy and
said it expects a long-awaited revival in business investment to help drive faster growth in the U.K. next year.
The Confederation of British Industry said it now expects the economy to expand 1.4% in 2013 compared with a previous
forecast of 1.2%, following better-than-expected growth in the third quarter and signs that recovery is spreading.
"The recovery that started in the service sector has fanned out to manufacturing and construction, and is shaping up
to be more broad-based," said CBI director-general John Cridland.
The CBI said it expects growth to accelerate to 2.4% in 2014 and to 2.6% in 2015, driven by a pickup in investment and
exports. Policy makers have for years sought to nurture a "rebalancing" of the British economy towards trade and
investment and away from debt-fuelled consumption, with limited success.
The CBI said it doesn't expect the Bank of England to raise its benchmark interest rate in 2014 or 2015. The central
bank pledged to leave its benchmark rate untouched until unemployment in the U.K. drops to 7%. The jobless rate is
currently 7.7%, and the CBI said it expects unemployment to remain above target through 2015.
However, the CBI's director of economics Stephen Gifford said that, while the U.K.'s economic prospects are improving,
risks to growth remain, including the possibility that the euro-zone debt crisis flares up again or that central banks'
efforts to reverse some of the stimulus policies deployed since 2008 cause unwelcome swings in financial markets.
Write to Jason Douglas at firstname.lastname@example.org
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