No weeds in UK’s green shoots of growth

 

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Photo Credit: Lawrence OP via Compfight cc

 

In previous years, any signs of growth – the so-called ‘green shoots of recovery’ – were more than welcomed by economists in general.

 

 

So it should be especially promising that in its latest report, the Confederation of British Industry is looking at the particular types of growth – and is happy with what it sees.

 

That is because the current pattern of growth seems stable, with none of the misleading ‘weeds’ among those ‘green shoots’.

 

John Cridland, director general of the CBI, says: “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 and an uptick in M&A activity as animal spirits return.”

 

The CBI is now forecasting GDP growth of 2.6% in 2014, an increase from 2.4% in its November forecast, with business investment making a positive contribution towards that total.

 

Growth is expected to continue into 2015, with the prediction for the year revised downwards by a corresponding amount, from 2.6% to 2.5%.

 

In terms of business investment, a substantial turnaround in fortunes is predicted by the CBI during 2014, from last year’s 3.7% contraction.

 

By the end of this year, business investment growth is expected to return to positive territory at 6.6%, rising further to 8.3% in 2015.

 

However, with an election looming, politics threatens to distract businesses from their core concerns of growth and profit, and Mr Cridland adds that this could prove to be a “real mood killer” for some business leaders.

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