UK businesses 'in for a bumpy ride'

Slow growth forecasts and rising inflation means UK businesses are in for a "bumpier ride" over the next two years.

According to the Confederation of British Industry (CBI), this year's GDP growth is likely to stand at 1.8 per cent, with inflation expected to peak at 3.2 per cent.

However, in the long-term the CBI expects inflation to come down - and predicts that interest rates will be cut over the coming year.

Richard Lambert, the CBI's director general, says despite talk of an economic slowdown, businesses are remaining positive about the future.

"After a few good years, the UK corporate balance sheet is in good shape. Our flexible labour market is a real force for stability and our best bet is still that our economy will continue to show modest growth this year and next, before starting a gradual recovery," he commented.

The CBI, which has a network of offices around the country, is the UK's main business lobbying organisation.