UK’s economy ready to grow
BRITAIN’S economy is stabilising, with the worst of the recent quarterly falls in GDP having passed into history, the Confederation of British Industry (CBI) will today predict.
But the employers’ group warns that it will take until the beginning of next year before there is a return to economic growth.
The report is published a day after respected economist Paul Krugman, who won the Nobel prize for economics in 2008, said that the UK was in the best shape out of all the economies in Europe thanks to intelligent recession-busting policies.
And this weekend finance ministers from the G8 said the world’s largest economies were beginning to stabilise despite the risks they face amid the global recession.
At a meeting in Italy, the ministers said stock markets were rising, interest rates were stable and consumer confidence was returning.
The CBI predicts that UK GDP, propped up by low interest rates and quantitative easing, should flatten out in the second half of this year, with quarter-on-quarter figures of -0.1 per cent and 0 per cent in the third and fourth quarters, and modest quarter-on-quarter growth of 0.1 per cent and 0.3 per cent in the first and second quarters of 2010.
CBI director-general Richard Lambert said: “The world recession has deepened, so it is not surprising that the UK economy has continued to suffer. However, the harshest period of the recession looks to be behind us, the economy stabilising and this should continue during the second half of this year. The return to growth is likely to be a slow and gradual one; difficult credit conditions are still affecting business behaviour.”
The CBI predicts that by the end of the recession, Britain’s economy will have shrunk by a cumulative 4.8 per cent – far less severe than the 5.9 per cent in the early 1980s – following five consecutive quarters of falling GDP.