Britain's CBI ups 2014 GDP growth forecast to 2.4 percent

LONDON Sun Nov 3, 2013 12:13am GMT

Employees Joe Don (L) and Darren Lowarson give a Rolls Royce Ghost its final finish polish at the Rolls Royce Motor Cars factory at Goodwood near Chichester in southern England April 24, 2013. REUTERS/Luke MacGregor

Employees Joe Don (L) and Darren Lowarson give a Rolls Royce Ghost its final finish polish at the Rolls Royce Motor Cars factory at Goodwood near Chichester in southern England April 24, 2013.

Credit: Reuters/Luke MacGregor

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LONDON (Reuters) - Britain's business association, the CBI, revised up its forecast for the country's economic growth next year to 2.4 percent on Sunday, predicting a rebound in business and housing investment.

The previous quarterly forecast from the Confederation of British Industry, in August, expected 2014 gross domestic product growth to be 2.3 percent.

"The recovery that started in the service sector has fanned out to manufacturing and construction, and is shaping up to be more broad-based," said CBI Director-General John Cridland.

Many economists have revised up their growth forecasts in recent months on signs of strong expansion in the third quarter of the year.

An October 2013 Reuters poll of economists showed an average forecast of 2.2 percent for 2014, building on expected growth of 1.4 percent this year, the same as forecast by the CBI.

A finance ministry spokesman said the CBI report showed the government's economic policies were effective.

While the CBI said there remained headwinds from a sluggish euro zone recovery and slowing growth in emerging markets, the forecast registered a generally more positive outlook.

It forecast that unemployment - currently 7.6 percent - would fall faster than it previously expected, but would remain above the 7 percent level at which the Bank of England would consider raising interest rates.

The central bank does not expect unemployment to fall below 7 percent for at least three years, but most private-sector economists think it will.

The CBI said it expected employers would seek to get more out of the workers they already have by increasing productivity and hours worked, slowing the drop in unemployment.

(Reporting By Shadi Bushra; Editing by Robin Pomeroy)

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