CBI director-general John Cridland’s comments came as the Confederation of British Industry (CBI) today downgraded its UK economic forecasts after a slowdown in growth in the first quarter, but asserted the recovery remained “on a firm footing”.
Amid some political pressure for David Cameron to bring forward the UK vote on EU membership from the current deadline of end-2017, Cridland said: “No. I’m not in favour of an early referendum.”
He said the Prime Minister’s efforts to secure reform of the EU ahead of the referendum was firmly backed by the business community, but he added “the reform bar needs to be set high enough to be meaningful, but low enough to be achievable”.
Cridland singled out the EU Working Time Directive and Agency Workers Directive as “bad pieces of legislation”, and said the EU should also not get involved in “lifestyle legislation” as opposed to legitimate areas like workers’ holidays and health and safety.
But the director-general added: “Let’s hold the referendum when we have a reformed European agenda. Business does not like uncertainty. But we live in a complex world where uncertainty is a part of life.”
It came as the CBI forecast the UK economy would grow at 2.4 per cent this year, down from its 2.7 per cent prediction in February. It also scaled back its growth forecast for 2016 to 2.5 per cent from 2.6 per cent.
The CBI largely blamed weaker than expected official GDP data in the first three months of 2015.
But Cridland added: “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.”
The optimism contrasts markedly with recent data, including last week from the closely-watched Markit/Cips purchasing managers survey which showed Britain’s key services sector suffered its sharpest slowdown in growth for nearly four years in May.
However, the CBI director-general said the CBI’s optimism despite the slowdown reflected inflation was well under control, giving the Bank of England “plenty of wriggle room” in keeping interest rates historically low.
The organisation said today the recovery had also been based on job creation and business investment, and not just a boom in consumption.
Meanwhile, Cridland said his members wanted the government to maintain its austerity drive. He said the CBI’s members considered securing the public finances was “the most important job for the government and it’s only half done”.
The Ernst & Young Scottish Item Club forecast today that Scotland’s economy will continue to grow in 2015 but will lag the UK.
It said Scottish output will rise 2.2 per cent, undershooting the group’s estimated UK growth by 0.5 per cent after matching it in 2014. The report forecasts 25,000 new Scottish jobs in 2015.