The worst of the recession is behind us and the economy is now stabilising, the CBI has claimed.

However, the business group said the UK will not return to growth until the beginning of next year.

The prediction comes hot on the heels of last week’s claim by the National Institute of Economic and Social Research (NIESR) that the economy actually grew in April and May.

According to CBI predications, GDP will flatten out during the second half of this year, with figures of -0.1% and 0% in the third and fourth quarters of the year.

Richard Lambert, CBI director general 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 is 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. For positive growth to return, lenders need to feel more confident so that credit can start flowing again.”

Lambert warned against getting ‘carried away’ by indicators of recovery, insisting it would take some time before any green shoots had a real impact.

The group estimates that the UK economy will have shrunk by a total of 4.8% by the end of the recession.

Source: © Crimson Business Ltd. 2009

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