The business lobby cited “weaker than expected” growth data for the first quarter of this year as the reason behind the readjustment. Growth was just 0.3% in the three months to March, but the CBI said this was a “temporary blip” and predicted that the economy would rebound strongly in the rest of year.
Quarter-on-quarter growth is expected to hit 0.8% in Q2, 07% in Q3 and 0.6% in Q4.
CBI director general John Cridland said: “The recovery has built up a good head of steam and we expect to see solid, steady and sustainable growth carrying through into next year.
“Our members are feeling more upbeat than some of the recent official numbers suggest, with our surveys showing that retail and the service sectors in particular are performing strongly.
"Businesses on the ground are seeing a pretty solid recovery. Business investment is making a strong contribution to growth, while solid consumer spending is being underpinned by rock bottom inflation, low interest rates and rising incomes.”
However, the CBI said ongoing sluggishness in eurozone and a renewed threat of a Greek exit from the currency represented risks to the recovery.
Rain Newton-Smith, CBI director of economics, said: “Recent talks over Greece underline the need for a decision on extending bail out financing. Meanwhile, weaker US growth and the slowdown in China, coupled with the strength of Sterling against the Euro, are acting as a drag on exports.”
Cridland added that, while the UK referendum on European Union membership was a “hot topic” in British boardrooms, CBI members want to remain in a reformed EU.
The CBI expects inflation to stay below 1% this year, but start to increase relatively quickly from late 2015, reaching 1.3% in the first quarter of next year. Earnings increases are expected to outpace inflation at 2.0% this year and 2.4% next year, while unemployment will continue to move downwards.
