Business Investment Continues To Support The UK Economy, According To The CBI

The Confederation of British Industry (CBI) has said the UK is experiencing the "right kind of economic growth".

In its new economic forecast, the body claimed that the UK is no longer seeing its balance sheets fuelled by debt or a housing bubble, as had previously been feared.

The business group also predicted strong economic growth of 2.6 per cent in 2014, up from its previous figure of 2.4 per cent in November, something it says is driven by stronger-than-expected employment figures.

Further to this, the CBI forecast gross domestic product to rise by 2.5 per cent in 2015 - down 0.1 per cent from its November release.

Business investment growth is also set to rise. While this figure shrank by 3.7 per cent in 2013, analysts at the CBI believe it will grow to 6.6 per cent in 2014, before reaching 8.3 per cent in 2015.

John Cridland, director-general of the CBI, said: "We are starting to see signs of the right kind of growth. In our view this is not a debt-fuelled, housing bubble-led recovery - our forecast shows encouraging signs that business investment and net trade are starting to play their part.

"More businesses are feeling inclined to invest in new technology and advertising. We can also expect to see more companies coming to market to raise finance."

However, Mr Cridland did offer a note of caution with his group's quarterly release.

The director-general claimed the upcoming elections will cause business leaders to experience a period of substantial instability. The CBI has not revealed which political party it will endorse in the 2015 poll.

Katja Hall, CBI chief policy director, echoed Mr Cridland's belief that the UK is seeing the "right sort of growth", but stated the chancellor must back up his achievements with an enterprise-focused budget next month.

Despite this latest report, Labour claims only the highest earners are seeing their wages rise under the coalition's recovery.

Expert Opinion

These latest figures from the CBI are very encouraging and suggest that the economy is continuing to move in the right direction, with forecasts on business investment looking particularly encouraging this time around. <br/> <br/>"All of this paints a very positive picture for small businesses, which many believe will play an important role in further improvements. <br/> <br/>"Such companies are often well-placed to take advantage of the opportunities which are likely to arise in the coming months, although other studies have shown that the community remains affected by some concerns regarding access to finance. <br/> <br/>"It is absolutely key that small businesses thinking about growth in the future have the right support available to them. This should include legal advice to help with the inevitable growing pains of expanding operations, growing a workforce and accessing investment opportunities." Steven Beahan - Partner