Growth will restart in 2012, but high levels of uncertainty around the economic outlook, mainly driven by the situation in the euro area, mean growth will remain subdued, particularly in the first half of this year.
That's the latest analysis from the CBI who this morning in their latest forecast suggest that growth this year will be 0.9 per cent, a little down from November’s forecast (1.2 per cent).
The survey also predicts CPI inflation will fall towards its target levels of 2.2 per cent by the fourth quarter of 2012, and will remain close to Bank’s 2.0 per cent target throughout 2013.
This.they say, will relieve some of the pressure on household incomes, with consumer spending picking up slightly in the second half of this year.
John Cridland, CBI Director-General, said:
“Economic conditions will continue to be tough, especially in the first half of the year, and the UK recovery will depend on the successful resolution of the Eurozone crisis.
But he adds, "some activity has picked-up since before Christmas and the mood among many businesses has improved, with exception of companies serving the UK consumer where business remains flat.
“Although risks remain we expect growth this year, improving modestly in 2013, primarily driven by positive net trade and business investment."
However more bad economic forecasts this morning from the Chartered Institute of Personnel and Development (CIPD).
They warn that unemployment in the UK could reach 2.85 million by the end of 2012 as the jobs market faces its most difficult quarter since the recession.
The Labour Market Outlook survey, conducted by Yougov for the CIPD reveals that a rising number of private sector firms surveyed plan to make redundancies.
The study shows that the number of companies set to hire is now much lower than those that warn of cuts.
The results also suggest a further widening of the north-south divide in job prospects.
Gerwyn Davies, Public Policy Adviser at the CIPD, said of the report:
“Whereas employers were in ‘wait and see’ mode three months ago, more private sector firms, particularly among private sector services firms, have decided to push the redundancy button in response to worsening economic news. This will exert yet more pressure on a jobs market that is buckling under the strains of contractions in economic growth and public sector employment. The fear is that these existing pressures, which include a widening chasm between the employment prospects of those in the north and the south, will become greater still if business conditions do not improve in the next few months. With many employers telling us that access to finance has been a big factor in preventing them from creating new jobs over the last two years, and with net private sector hiring intentions now on the slide, the labour market case for government action to increase the availability of credit to businesses is stronger than ever.”