CBI comments
"The UK economy remains deeply troubled, and the first quarter of this year has been tougher than expected. Firms have been running down their stocks of completed goods, and that is having a real impact on output, jobs and investment. Anxious consumers are spending less and building a savings buffer," said CBI director general Richard Lambert.
"In these turbulent times it is difficult to build a clear picture of how the economy will perform, but there are a few tentative signs that the steepest phase of the recession is now behind us, and that the banking packages, aggressive monetary policy and fiscal support will steady the pace of decline from here on. The recession is by no means over, but we see a return to very weak growth by spring 2010."
The CBI, which lobbies the government on behalf of UK business, reckons the economy will have shrunk by a total of 5.1% by the end of this recession, which is bad, but put into context by the fact that it shrank by a cumulative 5.9% in the early 1980s recession.
The CPI measurement of inflation is expected to fall below two percent this quarter and remain low well into 2010. Interest rates are therefore expected to stay at 0.5 percent for another year at least.
Unemployment is expected by the CBI to continue to increase, reaching ten percent next year and peaking at 10.3 percent in Q2 2010. Both household and business spending are expected to drop considerably this year, but improve slightly next year.