In its latest quarterly economic forecast, the employers’ group has revised its growth outlook from a 0.3% contraction for the year to 0%.
Although the economy expanded by 1% in the the third quarter, this is expected to drop to 0.2% in the fourth and leave the year’s growth essentially flat.
CBI director-general John Cridland said: “Despite the better than expected third quarter performance, the UK economy has bumped along the bottom this year, with overall growth fairly flat.”
However, the group warned that risks to the UK economy remain skewed on the downside, with concerns persisting over the health of the eurozone and the future path of inflation.
The ongoing eurozone crisis is likely to depress the UK’s export prospects, with net trade expected to drop by 0.1% in 2012 before increase to 3.7% as the global economy strengthens. The CBI also said inflation will be higher than expected in 2013 owing to the rises in utility prices.
Growth in 2013 is now expected to come to 1.4%. Cridland added: “While we expect underlying momentum to pick up modestly next year and to be slightly stronger in 2014, the pace will remain relatively lacklustre.”
