CBI urges leaders: don’t play politics with the economy
Interest rates will rise much earlier than expected next year as the UK’s recovery surpasses expectations, according to the CBI business group, which also warned politicians against jeopardising the rebound with pre-election soundbite policies.
The CBI now predicts 3 per cent growth this year, up from earlier estimates of 2.6 per cent. It believes the Bank of England will be forced into its first interest rate rise since July 2007 at some point in the opening three months of next year – earlier than the second quarter move previously guided by the Bank, and before May’s general election.
Katja Hall, chief policy director at the CBI, said: “Political positioning must not be allowed to stifle investment, whether it’s an unrealistic immigration target, unjustified interventions into specific markets, flirting with leaving the EU, delaying vital long-term infrastructure projects or restricting labour market flexibility.
“Pre-election pledges should not deter overseas and home-grown investors and entrepreneurs, nor limit a future government’s ability to deliver prosperity in the UK.”
John Cridland, CBI director general, added that politicians must not “jeopardise” a recovery. “Businesses recognise the realities of election time but want all parties to ensure their policies make a positive difference. Politicians must be wary of the risk of headline-grabbing policies that weaken investment, opportunity and jobs.”
The CBI now expects unemployment to drop to 2 million by the end of next year. Business investment is forecast to grow at near-double digit rates this year and next.
Meanwhile in the United States, Atlanta’s representative at the Federal Reserve central bank said he expected its quantitative easing stimulus programme would end this year. Dennis Lockhart said the world’s biggest economy will expand at about 3 per cent in 2014, probably leading the Fed to stop its bond-buying in October or December.
The Fed has already cut back its vast QE programme of buying bonds, last month trimming the purchases by $10bn (£6bn) for the fourth straight month.
Mr Lockhart told an audience in Dubai: “Conditions will develop by the middle of next year, at which time we can conceivably begin a gradual process of raising [interest] rates.”
- 1 The BBC has just done more to eradicate ‘terrorism’ than all our wars since 9/11
- 2 Dog thinks owner is drowning in lake, dives in and tries to pull him out
- 4 Chilling drone footage captures Auschwitz ahead of 70th anniversary of liberation
Auschwitz liberation 70th anniversary: Woman sent to three Nazi death camps describes surviving gas chamber
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Greece elections: Greek PM Alexis Tsipras takes aim at 'neo-liberal' Europe as country gears up for prolonged austerity battle
Pornhub star Mia Khalifa receives death threats after being ranked the site's top adult actress
Prince Philip set to be knighted by Australia: Celebrate by reading his greatest gaffes
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
Leaked documents show Ukip leaders approve NHS privatisation once it becomes more 'acceptable to the electorate'
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...