Growth predicted to return in Q3 and Q4, but economy will remain tough, says CBI

Modest growth expected in 2010

The Confederation of Business Industries (CBI) is expecting the recession to end in the UK this year, reports the Retail Bulletin.

The CBI’s prediction of 0.3 per cent growth in Q3 and 0.4 per cent growth in Q4 2009 has come with a note of caution. Recovery is expected to slow in 2010, with unemployment reaching a three million high in Q2 and the January VAT increase set to slow spending. The Confederation anticipates that weak growth to hit 0.1 per cent in Q1 2010 and 0.3 per cent in Q2.

UK exports will achieve growth of 1.7 per cent in 2010, according to the CBI, due to the continued relative weakness of the pound.

"The outlook is improving as the UK draws strength from quantitative easing, a weak pound and a recovering global economy,” said CBI director-general Richard Lambert. “Although growth this quarter should mark the end of the recession, conditions in the UK will remain tough for some time yet, and it is difficult to see where demand growth will come from.

"Firms that have run down their stocks will now be starting to raise output to meet demand, and consumers are likely to bring forward spending before VAT rises. But once these two boosts are out of the way there is no clear driver of robust economic growth into 2010.

"Growth next year will remain very weak, while job losses will continue and household consumption will stay tightly squeezed. The sharp fall in business investment this year is a real concern, as are the public finances, and both will affect UK economic prospects in the years to come."

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