The rising food and fuel prices will hit household spending in Britain and pull down the country's economic growth next year to its lowest level since 1992, a leading employers' group warned Monday.
The Confederation of British Industry (CBI) revised the forecast downward to 1.3 percent, as households tighten belts in the face of higher food and fuel prices. The growth rate had already been brought down in March.
The organization adjusted Britain's GDP growth expectation for 2009 from 2.1 percent to 1.7 percent in March.
It said a "very prolonged period of very sluggish growth" was on the cards for Britain, but it was not predicting a recession.
The best bet is still that there will be a measure of economic growth in 2009, said Richard Lambert, CBI director general.
The CBI predicts that inflation will peak at 3.8 percent, and expects it to rise to 3 percent when new figures are released Tuesday.
There will be little leeway for the government to increase public spending, as it already faces a record public sector deficit, the organization said.
Over the past year, the CBI has consistently had to revise down its economic growth forecasts.
"The main reason is that the oil price -- measured in depreciated sterling -- has continued to rise strongly, roughly doubling since the spring of 2007," said Lambert.
This has squeezed household incomes and companies' profit margins, and has also made it much harder for the Bank of England to cut interest rates in the face of the economic slowdown, he added.
Source: Xinhua
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