Economic outlook brighter and 'improving'

Economic outlook brighter and 'improving'

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Wednesday, 23, Sep 2009 10:01

By Sarah Garrod.

The economic outlook is looking slightly brighter and is "improving", business forecasters have said today.

The CBI has said the UK economy could emerge from the recession by Christmas, but warned growth in 2010 would still be quite fragile and slow.

Predictions from the CBI are that UK GDP will post quarter-on-quarter growth of 0.3 per cent in the third quarter of 2009, ending up to 0.4 per cent in quarter four as "consumers bring spending forward in advance of the VAT increase in January".

CBI said the VAT increase could dampen spending in January, meaning 2010 could start with very weak growth.

Richard Lambert, CBI director-general, said: "The outlook is improving as the UK draws strength from quantitative easing, a weak pound and a recovering global economy.

"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.

"Growth next year will remain very weak, while job losses will continue and household consumption will stay tightly squeezed."

The CBI said inflation was likely to fluctuate over the next year, and is likely to remain below the Bank of England two per cent target for this year.

There was bad news for the jobs market in today's report, with the CBI forecasting unemployment to continue rising, and peaking at around three million in the second quarter of 2010. However, they did expect the pace of unemployment to slow.