UK economy to grow at 'sluggish' rate: CBI

The UK economy will only grow at a "sluggish" rate this year, according to the CBI.

The group has lowered its forecast for the UK's GDP in 2011, predicting growth of 1.3%, down from its previous prediction of 1.7%, made in May.

But the CBI still expects the economy to pick up in 2012, the BBC reports.

"The economic outlook has become even more challenging but we still expect the economy to continue to grow modestly this year," the group said.

"The global economy has slowed in the face of several shocks including the Japanese tsunami and soaring commodity prices," CBI director general John Cridland said.

The CBI also warned investor confidence had been eroded due to the Greek sovereign debt crisis and the political wrangling over raising the debt ceiling in the US.

It expects "relatively modest" investment growth of 3.7% in 2011 and forecasts the UK economy to grow by 2.2% in 2012, the same as it predicted in May.

Last week, the Office for National Statistics said the UK grew by 0.2% in the three months to 30 June, down from 0.5% in the previous quarter.