The UK economy will grow robustly this year before slowing slightly next year, according to the Confederation of British Industry (CBI).

In its latest quarterly forecast, the CBI has revised upwards its previous estimates for economic growth, citing improved exports for British companies helped by improved global demand.

It expects gross domestic product (GDP) growth to average 3.1% this year and 2.6% next year, a 0.2% and 0.1% increase respectively on its earlier forecasts.

It says inflation will remain under control, however, remaining low into next year.

Manufacturing improves

The estimates have been published alongside a CBI survey showing that manufacturing industry improved slightly in February.

Orders were still falling but at the lowest rate since March 1998.

Some 26% of manufacturers reported that total orders were below normal, while 15% said they were better, making a balance of minus 11%.

This compares with minus 14% in January and minus 15% in December.

However, manufacturers have had to slash prices to compete in cut-throat marketplaces, especially in exports where the strength of the pound has made them less competitive.

Export demand remained well below normal but the figures were better than a CBI monthly survey has shown for more than two-and-a-half years.

Sudhir Junankar, CBI associate director of economic analysis, welcomed the improvement in export demand "as it coincides with economic revival in Euroland and continuing buoyant US growth."

However, he said the price cutting forced on manufacturers by the strength of sterling was "squeezing export margins to the bone".