Business organisation the Confederation of British Industry (CBI) has downgraded its forecasts for economic growth in the UK for 2008 and 2009. But the organisation is upbeat about the state of British businesses and the opportunities the current market presents. Lower growth has in the past presented CIOs with an opportunity to invest.

In its quarterly economic forecast released today, the CBI has lowered its prediction for GDP growth to 1.8 percent, a drop of 0.2 percent. “The UK economy is being buffeted by some strong head winds,” said Ian McCafferty, Chief Economic Advisor at the CBI.

Of concern to CIOs looking to expand operations or develop new business is the forecast that investment will slow, although it is still expected to grow. The CBI believes investment will only grow by 1.4 percent in 2008, compared to 5.0 percent in 2007.

“Having enjoyed two years of strong growth, we are now living in uncertain times,” said CBI Director General Richard Lambert. “We are facing a financial shock on a scale not experienced in recent times, which is coming on top of already slower growth.”

As the economy slows, inflation is expected to rise, with the CBI expecting a CPI rate of inflation reaching 3.2 percent in Q3 of 2008. Previously the CBI had predicted an inflation rate of 2.7 percent.

Next year will also be difficult. TheChancellor of the Exchequer Alistair Darling predicts that economic growth will be between 2.25 percent and 2.75 percent. But the CBI disagrees and puts 2009 economic growth at 1.7 percent GDP. It believes 2009 will see continued problems in the credit markets, rising commodity prices and demand for products and services dropping on the local and international markets.

Former editor of the Financial Times Lambert is positive about the state of UK business though and its ability to weather the storm, “It is vitally important to keep the story in perspective. 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.”

A report from the Centre for Economics and Business Research (CEBR) in association with Harvey Nash agrees with Lambert on the UK’s “flexible labour market”. Its report The Future Flows, reveals that skilled migration into the UK of IT and telecoms workers will add £16.2 billion to the sector by 2012.

“Far from undermining the UK labour market, migration is vital to future economic stability, helping to fill in the gaps created by older and under-skilled workforces,” said Albert Ellis, Harvey Nash chief executive.

The CEBR findings indicate that the number of skilled migration for IT and telco sectors will rise to 160,000 in 2012, driven by an increasing demand for eCommerce software development. The report also reveals that skilled migrant workers will contribute £77 billion to the UK economy by 2012.