British economy will escape a double-dip recession, says CBI

IN THE FACE of dire warnings that Britain is about to plunge into double-dip recession, the CBI (Confederation of British Industry) issued a more positive forecast today, claiming the economy is crawling its way out of the dark fiscal hole. The CBI, a business lobbying group that represents 240,000 companies, believes growth in each of the first two quarters of 2012 will be 0.2 per cent, followed by 0.6 per cent and 0.5 per cent in the third and fourth quarters. Here's why CBI believes the economy is on the up...
 
Encouraging business data
The main cause for subdued economic growth, particularly in the first half of 2012, is uncertainty around the eurozone. But the CBI says business survey data in UK manufacturing and professional services has been more encouraging in recent months. It shows that activity picked up in December and improved further into the New Year.
 
Household conditions to improve
A weak growth in wages and high levels of unemployment are set to continue, keeping a reign on household spending, but a slight ease in the inflation rate in the second half of the year looks likely to lift some of the pressure on household incomes.
 
Business investments set to grow
Improved conditions for households are expected to have a knock on effect for business confidence and expenditure. The CBI predicts that total business investment will continue to grow by 4.3 per cent this year and five per cent next year.

Banking crisis averted
The European Central Bank's decision to inject more liquidity into the system has reduced the chance of a banking crisis, says the CBI chief economic adviser Ian McCafferty.
 
Exports to increase
As well as increased business investments, net trade will continue to provide the most positive contributions to growth, predicts the CBI. There are tentative signs of economic stabilisation in the ‘core' eurozone countries, which account for a large proportion of UK exports, and reasonably good growth prospects for the United States. CBI therefore expects exports to increase by 4.3 per cent in 2012 and 6.4 per cent in 2013. ·