Confederation of British Industry cuts outlook for economic growth

The CBI reduced its 2015 growth forecast to 2.4% and its 2016 forecast to 2.6%, both 0.2 percentage points lower than its previous forecasts in August, though still a bit better than average for the British economy.

“Manufacturers are enduring tougher conditions as a persistently-strong pound is hamstringing our export competitiveness,” said CBI director-general John Cridland.

“But our domestic story is strong and overall we are now in a phase of stable but solid economic growth.”

Separate figures from Visa Europe, also released yesterday, showed consumer spending in October grew 2.1% on the year in real terms, its fastest growth in three months.

British retailers have increasingly adopted US-style ‘Black Friday’ discounts in recent years in a bid to kick-start pre-Christmas spending on the day after the US’s Thanksgiving holiday.

The CBI is also focused on skills shortages as unemployment in Britain falls towards its pre-crisis level.

However, a quarterly report from a human resources professional body, the Chartered Institute of Personnel and Development, cast doubt on the scale of this problem, saying that skills shortages were confined to just a few sectors.

Just 15% of job vacancies were proving hard to fill, and employers expected to raise basic pay levels by an average of just 2% over the next 12 months, it said.

The Bank of England, which downgraded its own economic growth forecasts last week on the back of weaker overseas demand, nonetheless forecast wages would rise by around 3.75% over the coming year.