It is perhaps time to take another look at how the economy is performing.

Overall, its seems that we have still to achieve escape velocity from the relative stagnation of the last few years, and the CBI is now expecting growth over the next 12 months of two per cent, unchanged from our November forecast.

Quarter-on-quarter growth is expected to be around 0.5-0.6 per cent.

So we are beginning to see the return of some organic growth, with a clear sign that firms offering the right products into the right markets are growing sales and expanding.

But looking ahead, external risks to the outlook in the Eurozone and further afield are likely to keep growth at home and abroad in check.

Here in Thames Valley, the projected growth trajectory remains flat overall, and asked about current and expected trading conditions, companies use expressions like ‘unpredictable’, ‘revenue declines’, and ‘increased financial pressures’.

Many companies are also having to adjust to changes in market structures, coupled with increased competition from countries such as China and the other BRICs.

We are forecasting that inflation will edge higher until mid-2013, but will fall back in the second half of the year, and will be close to the Bank of England’s two per cent target throughout 2014.

Unemployment levels are unlikely to change significantly over the forecast period, at 2.5 and 2.42m in 2013 and 2014 respectively.

Uncertainty on the international front is likely to continue to act as a restraint to business investment growth, which is expected to remain modest at around six per cent in 2013 and 2014.

The recovery is going to be a long drawn out process of adjustment, alongside deficit reduction.

Contact Steve Rankin

at the CBI

on 01252 360420