September 4, 2014 / 6:22 AM / 3 years ago

UK economy slows a touch in August - CBI

LONDON (Reuters) - Britain’s economy slowed in the three months to August, adding to expectations that the strong pace of recovery will lose a bit of its momentum in the second half of the year, one of Britain’s business lobby groups said on Thursday.

The Confederation of British Industry’s (CBI) growth indicator showed that private sector expansion in August had fallen to a five-month low at a balance of +21 percent, down from +29 percent in July but still above average.

Over 2014, the business group predicted the economy will grow at 3.0 percent. Momentum is expected to ease off in the latter part of the year and overall growth in 2015 is estimated at 2.7 percent.

Both forecasts were unchanged from previous estimates by the CBI issued in May and suggest Britain’s economy is on course to have the strongest growth among the world’s big industrialized economies this year.

“UK businesses are still facing a significant amount of uncertainty,” said John Cridland, the CBI’s director-general, citing the Sept. 18 referendum on Scottish independence, May’s national election and tensions in Ukraine and the Middle East.

The CBI said Britain’s slow wage growth was set to reach just 1 percent this year and would be followed by a modest increase to 2.4 percent next year.

The Bank of England has said it is looking at signs of wages picking up as it considers when to raise interest rates from their record-low level of 0.5 percent.

Business investment is expected to rise by 10.5 percent this year and by a further 7.8 percent in 2015, the CBI said.

To encourage business investment further, the lobby group called on the government to improve access to finance for companies and extend tax breaks to include buildings and structures.

Writing by Hannah Murphy; editing by William Schomberg and Toby Chopra

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