A “dark cloud of uncertainty” over global growth and the outcome of the EU vote is chilling growth, says the CBI.
The lobby group cut its economic growth forecasts and says the economy will grow by 2% in 2016 and 2017, down from a previous forecast of 2.3% and 2.1%.
It said Brexit uncertainty was having a “tangible impact” on spending plans.
But the forecast is based on the assumption that “we stay in – it’s not a forecast of the effects of Brexit,” said CBI boss Carolyn Fairbairn.
She said: “A dark cloud of uncertainty is looming over global growth, particularly around weakening emerging markets and the outcome of the EU referendum, which is chilling some firms’ plans to invest.”
“At present, the economic signals are mixed – we are in an unusually uncertain period.”
Household spending will be the main driver of economic growth.
The first rise in interest rates will not now be for another year, it said.
It forecasts the first move will be in the second quarter of 2017, to 0.75%, according to the business group’s forecast.
Interest rates have been held at 0.5% since 2009.