- EU referendum is one downside risk for the economy in 2016
- Business lobby downgrades 2016 growth forecast to 2.3%
Britain’s economy could be thrown off track by the planned referendum on European Union membership, according to the country’s biggest business lobby.
Household spending and business investment will continue driving the expansion in 2016, the Confederation for British Industry said on Thursday, though risks including the ‘Brexit’ referendum, weak productivity and global turmoil are darkening the outlook.
Alongside its comments, the CBI cut its 2016 growth forecast to 2.3 percent from 2.6 percent and lowered its 2017 projection to 2.1 percent from 2.4 percent.
“While there’s little current evidence of uncertainty negatively affecting business investment ahead of the EU referendum, this is a potential risk to the U.K.’s solid economic outlook,” said Carolyn Fairbairn, director general of the CBI.
Bank of England officials say the buildup to the vote has yet to impact investment, but several surveys have shown business confidence is slipping. Economists at Nomura said Tuesday that an exit from the EU could provoke a U.K. recession by aggravating existing structural issues such as the large current-account deficit.
The CBI made its position on the EU clear in October, when it published a report saying that the benefits of membership of the bloc outweigh the disadvantages.