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Low inflation prompts CBI to raise UK growth forecast

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The Confederation of British Industry (CBI) has upgraded its UK growth forecast in the face of low inflation and falling unemployment figures.

he CBI’s forecast for economic growth in 2015 is now 2.7 per cent, up from a forecast of 2.5 per cent it made in November. GDP is expected to rise 0.7 per cent during each quarter of this year, and then grow by 2.6 per cent in 2016.

The organisation said growth will be supported by low inflation, which is currently 0.5 per cent, the low oil price, increased household spending, and falling unemployment.

The enhanced growth is also helped by low interest rates as it is now unlikely that rates will rise this year and may even be cut further.
However, political volatility thanks to the UK election and crises in Greece and Ukraine could negatively impact on trade, which would hit businesses.

Katja Hall, CBI deputy director-general (pictured), said: “Now is not the time for complacency, but falling unemployment coupled with improving wage growth and rock bottom inflation should mean that people see more money in their pockets.

“But businesses are looking on anxiously as insecurity continues to troll the eurozone and instability remains elsewhere.”

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