With the UK economic recovery remaining in a febrile state, the CBI is forecasting ‘patchy and slow’ growth during this year and next.
Their latest economic forecast expects GDP at 1.7% in 2011, which is only slightly lower than their previous forecast of 1.8%.
They are forecasting economic growth of 2.2% next year. This is also down slightly from the previous forecast in February which stood at 2.3%.
Stronger net exports are expected to make a positive contribution to UK economic recovery both this year and next.
The CBI economic forecast also expects business investment to help drive UK economic growth.
Investors should keep in mind that there is not always a strong correlation between the economy and markets. Equity markets can continue to perform strongly when economic growth is subdued.
In the UK, this is particularly relevant as the FTSE 100 index of leading UK company shares has a big exposure to overseas economies. This means that UK companies are not always reliant on a strong UK economy to drive demand and sales.
Photo credit: Flickr/bicameral
