“Good News Britain: CBI lifts UK growth forecasts”, says this morning’s Telegraph as the CBI have nudged up their growth forecasts for 2012 and 2013 andmade their first estimate at 2014 growth.
So how much ‘good news’ do the new forecasts actually contain?
Not a huge amount that I can see.
On growth, the CBI now expect 0.0% in 2012, 1.4% in 2013 and 2.0% in 2014. That compares to the June 2010 OBR forecasts (on which Government policy were based) of 2.8%, 2.9% and 2.7%. Growth that weak would mean it would be late 2014 before we regained early 2008 levels of GDP. The Telegraph today says to the new CBI numbers imply Britain will not face a ‘lost decade’, whihc may be true but i’m not sure a lost 6 years is cause for celebration.
As the CBI’s John Cridland commented, “While we expect underlying momentum to pick up modestly next year and to be slightly stronger in 2014, the pace will remain relatively lacklustre”.
On living standards, the news is bleaker. The CBI’s new forecasts for inflation and earniongs growth implies more painful falls in real wages lie ahead.
Whilst the OBR currently expect real wage growth to turn positive in mid 2013, the CBI numbers imply real wages will continue falling until mid 2014 – another year of squeezed living standards.
On the deficit, the CBI expect government borrowing in 2014/15 to be £102.2bn. That is around one thrid higher than the OBR’s current estimate of £75bn for 2014/15.
To summarise – weak growth, a bigger squeeze on living standards and higher borrowing. Welcome to ‘good news Britain’.