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Brighter outlook for end of 2009

The UK economy is set to ride out 2009 with steady growth, according to the latest predictions from the CBI.

The business group warned that constraints on demand will mean that continued growth into next year will be fragile.

Revealing its latest economic forecast, the CBI said that short-term economic prospects are brightening. However, the pace of recovery in 2010 is expected to be slow.

Sarah Green, Regional Director, CBI North East, 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.

“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.”

The CBI believes that household spending will stay under significant pressure as consumers remain worried about job losses, see weak wage growth, and opt to increase savings and cut debts.

This was posted in Bdaily's Members' News section by Ruth Mitchell .