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Tue, Mar 23, 2010 - Page 10 News List

UK economic recovery to remain fragile, CBI says


Britain’s economic recovery will remain fragile until the middle of next year because of the withdrawal of stimulus measures, the Confederation of British Industry (CBI) warned yesterday.

The end of emergency steps to combat the recession, such as the reduction in value-added tax and a scheme that subsidizes the cost of buying new vehicles, would affect the speed at which the economy recovers, the CBI said.

“The economic outlook is improving, but the lack of a clear driver for growth will make for a bumpy ride in the months ahead,” CBI director-general Richard Lambert said. “The CBI expects the recovery in 2010 to be slow and sluggish, with few signs of real strength until well into next year.”

Britain escaped from recession in the fourth quarter of last year with growth of 0.3 percent.

The expansion during the final quarter followed a deep recession that lasted six quarters — the longest on record in Britain.

The CBI predicted economic growth of 0.3 percent and 0.4 percent in the first two quarters of this year, followed by growth of 0.5 percent in the second half of the year.

Growth would then pick up during next year, driven by strengthening global demand, consumer spending and business investment, forecast the employers’ group.

The CBI is predicting annual economic growth of 1 percent this year, rising to 2.5 percent next year.

Lambert further urged the government to set out a “credible plan” to cut Britain’s ballooning debt at a faster rate than currently envisaged.

“To convince international investors that the spiraling budget deficit will not derail the economy, the government must set out a credible plan to balance the books by between 2015 and 2016, two years earlier than currently planned,” he said.

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