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'Recession to roll into 2010' - CBI

The UK economy will stay in recession until at least 2010, according to a leading business group. The rapidly deteriorating global economy and the continued difficulties UK businesses are facing in accessing credit will push the economy deeper into recession in 2009, according to the CBI.

The CBI’s latest economic forecast predicts that the recession, which began in the third quarter of 2008, will last throughout 2009. They expect the economy to contract by 3.3%, and unemployment to reach close to 2.9 million by the end of the year. The business group predicts that the recession will now last well into 2010, despite reassurances from the government.

Sarah Green, Regional Director for CBI North East said: “In recent months we have seen a slew of gloomy economic data from across the globe, showing world economic activity plunging sharply. Faced with a global confidence crisis, a rapid fall in demand and credit constraints, UK firms have been forced to scale back investment and cut jobs.

“The outlook remains extremely uncertain so forecasting remains especially difficult. Ultimately the severity of this recession will depend on the speedy implementation of the Government’s measures to unblock the credit markets and the success of various global stimuli packages in repairing business and consumer confidence.

“However, during the second half of the year the impact of interest rate cuts, falling inflation, the relative weakness of Sterling, plus the fiscal boost, should start to have a stabilising effect.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .