Growth will be tepid in early 2010, the CBI claims. Britain’s economy is now out of recession but conditions will remain tough over the months to come, a business group said today (September 23rd).
The Confederation of British Industry (CBI) forecast in a new report that UK GDP will grow by 0.3% over the third quarter and by 0.4% over the final three months of the year.
However, the group also predicted expansion of just 0.1% for the first three months of 2010, after the temporary VAT cut imposed by the government late last year comes to an end.
The sales tax is currently levied at 15%, but this rate is to revert to 17.5% from January.
Unemployment, currently at a 14-year high of almost 2.5 million people, is also predicted by the Chartered Institute of Personnel and Development to rise to 3.5 million next year.
This would exert further downwards pressure on overall UK output.
Stagnant economic growth can have marked effects on consumer finances, potentially influencing personal incomes as well as credit flows from banks.
CBI director general Richard Lambert commented: “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.”
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