A leading business organization in the U.K. has thrown its support behind government austerity measures and forecast that the private sector will offset the expected decline in public sector demand, according to Financial Times. On Monday, CBI said, We are rock solid behind the chancellors plans to eliminate the structural deficit, and offered a cautious forecast for slow but significant growth this year and next. The group expects to see 1.7% growth in gross domestic product during 2011 and 1 2.2% increase the following year.
The CBIs forecast is nearly unchanged from the outlook offered in February, and is slightly weaker than the official forecast from the Bank of England. The central bank issues its quarterly inflation report on Wednesday, and economists are expecting officials to issue a downgraded forecast for the coming year from the 2.6% forecast in February. That figure already represented a substantial downgrade from the 3.27% growth expected by the BOE in November. The Office for Budget Responsibility reported in March that it expected to see economic growth of 1.8% in 2011.