The Confederation of British Industry says the UK will achieve a return to growth of 0.5 percent in Q4 but further job losses and wide scale pay freezes should be expected next year as a slow recovery pans out.
The business organisation says that although the conditions will improve steadily over the next two years, UK GDP will still not have reached pre-recession levels by the end of 2011. We can expect growth of 1.2 per cent in 2010 followed by 2.5 per cent in 2011, if the CBI estimations are correct.
“The economy will be on a fragile path of very slow growth, as we continue to feel the lasting effects of the financial crisis,” said CBI deputy director-general John Cridland. “And it remains vital that government sets out clearer plans to address the fiscal deficit at its next opportunity in order to help shore up future UK economic prospects.”
The organisation says credit will remain tight next year, public debt will grow further still, and consumers will continue to spend cautiously. It predicts that the Bank of England will steadily raise the base rate of interest from its current historic low of 0.5 per cent to 2 per cent by the end of 2010.
The GDP growth this quarter will end 18 months of recession.