The CBI has downgraded its forecast for the first quarter of 2011 of UK economic growth.

The employers group said it expects growth of 0.2% down from 0.3%, with public sector job losses and a higher-than-expected inflation slowing the economy.

The group also expects the Bank of England to start raising interest rates from as early as Spring 2011.

The CBI said that it doesn’t however, see the UK falling back into recession, and predicts that second quarter growth will exceed or match 0.4%.

Consumer spending will take a hit in 2001, with the VAT rise taking effect from 4 January and energy bills expected to be higher than normal due to recent weather.

CBI chief economic adviser, Ian McCafferty, said “ Quarterly growth at the start of 2011 is likely to be very sluggish, although we do expect the recovery itself to stay on track.

“What is striking is how little we see growth accelerating in 2012. Typically, by the third year of a recovery, growth would be more robust than we expect for either 2011 or 2012”.

The CBI also predicts that after a 0.4% growth in the second quarter it expects 0.5% for each of the third and fourth quarters, giving 2% annual growth rate for the year.

Please note the views expressed in this blog are the views of the author, Andre Brown and do not represent the view of Locayta, its employees or its shareholders. For more information about Locayta, visit www.locayta.com