Britain is coming out of recession, but its recovery will be sluggish, the Confederation of British Industry (CBI) has predicted.
The body said that pre-Christmas spending – boosted by some purchases occurring before the rise in VAT – will help bring about economic growth of 0.5 per cent in the fourth quarter of 2009.
However, with unemployment set to go on rising before peaking at 2.8 million next September, growth will be limited to only 1.2 per cent in 2010, the CBI predicted.
CBI chief economic advisor Ian McCafferty said: “The UK economy faces a number of structural hurdles over the coming two years and this recovery – like that of the 1980s – will be relatively drawn out.”
Issues like the continued shortage of credit and public spending cuts will hold back growth, he predicted.
Such a situation could impact negatively on those with ongoing debt management issues.
The last year saw a 5.1 per cent contraction in gross domestic product, according to government figures.