CBI Tells Politicians: Don't Let UK General Election Blow Economic Recovery

Politicians gearing up for the looming general election are a threat to the UK economic recovery, according to a leading business group.

The Confederation of British Industry (CBI), the largest business lobbyist in the UK, said the economy will grow by 3% in 2014 in the best forecast yet mapped out for the country's recovery.

It comes after two other forecasters, the International Monetary Fund (IMF) and National Institute for Social and Economic Research (NIESR), estimated 2.9% growth for the UK in 2014 – the fastest rate of any western economy.

"The UK now has more stable economic foundations, and political risks must not jeopardise this," said John Cridland, director general of the CBI.

Britons will take to the polls in May 2015 for a general election and according to Katja Hall, the CBI's chief policy director, "politicians must stick with what's working.

"That means the new government, of whatever colour, keeping the deficit reduction strategy on track.

"It must also tackle the UK's economic challenges and not duck the tough decisions, such as reforming public services.

"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 European Union, 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."

Concerns

There are concerns over the unbalanced nature of the recovery, which has been heavily reliant on the housing market revival and consumer spending.

But the CBI said business investment will pick up over the next two years, by 8.3% in 2014 and 9.1% in 2015, suggesting a more balanced recovery.

Trade will continue to remain weak as demand in some of the UK's key markets, such as the eurozone, stay sluggish. And consumer spending, which has been dependent on the whittling down of savings because wages have been in real terms decline, will likely slip back towards the end of 2014.

However the emerging recovery in wages, as pay growth catches up with inflation, will support a 2.4% increase in household consumption for the year.