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Posted on August 25, 2009 by Sam Gooch | Posted under Finance
UK economy due to begin recovery process from 2010
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The CBI - the UK's top business lobby organisation, has predicted the economy will contract by 3.9% throughout 2009 before returning to growth of 0.7% over 2010. CBI director general Richard Lambert said: "The harshest period of the recession looks to be behind us." But he also added that people shouldn't get too carried away by talk of "green shoots" in the economy. The chancellor predicted the economy would shrink by 3.5% this year before growing by 1.25% in 2010 in his budget. Mr Lambert also said: "The return to growth is likely to be a slow and gradual one; difficult credit conditions are still affecting business behaviour. For positive growth to return, lenders need to feel more confident so that credit can start flowing again," a less optimistic forecast from the CBI. The National Institute of Economic and Social Research (NIESR) last week estimated that in April and May, the UK economy resumed growth. NIESR director - Martin Weale, has said he expects the next official GDP figures to demonstration "either that the recession is over or that it is close to over". But Mr Lambert spoke of it being too soon to call the end of the recession. "Some commentators have been carried away by recent tentative indicators as evidence of 'green shoots'. It will take some time before we can be sure these shoots have roots we can depend on for sustainable growth," he said. The CBI estimates GDP to drop by 0.1% in the third quarter of 2009 and to be flat in the final quarter. More significant growth is expected to resume next year, with economy growth of 0.1% in the first quarter and by 0.3% in the second. The CBI has predicted that by the time the UK overcomes the recession, the economy will have contracted by a up to 4.8% - not as severe as the the early 1980's when the economy shrunk by 5.9%. It also expects inflation to drop below the Bank of England's 2% target in the third quarter of 2009. It also predicts unemployment to peak at around three million in the second quarter of 2010. Ian McCafferty, CBI's chief economic adviser said: "The restraint shown by businesses and their staff in setting pay awards and accepting short-time working should help to curb the pace of job losses." About The Author: UK Price Comparison website Which4U - Compare Credit Cards, Savings Accounts, Fixed Rate Bonds, Bank Accounts, ISAs, Loans, Mortgages, Insurance, TV & Broadband and Gas/Electric bills to find the best UK deals |
Tags: COMPARE CREDIT CARDS, COMPARE FIXED RATE BONDS, UK ECONOMY, UK RECESSION
