Weak growth to follow mild recession, says CBI

The UK economy will emerge from a 'shallow recession' and see weak growth in 2009, the Confederation of British Industry (CBI) has predicted.

The CBI believes that next year's growth will be the slowest since the 1992 recession, as it cut its Gross Domestic Product (GDP) growth predictions for both 2008 and 2009.

The warning follows similar recent predictions by the British Chambers of Commerce and by the European Commission, and is accompanied by the CBI's call for the Bank of England to cut the Bank interest rate by 0.5% in November.

The CBI has forecast that July to September will show a quarter-to-quarter shrink of 0.2%, with the fourth quarter of 2008 showing a further decline of 0.1%.

However, CBI director-general Richard Lambert said that while growth in 2009 would be at best "feeble", the downturn would not be as prolonged as in the 1990s.

"Over the past year our forecasts for economic growth have been shaved lower and lower as the UK economy continues to struggle with the twin impact of higher energy and commodity prices and the credit crunch," he added.

"Having experienced a rapid loss of momentum in the economy over the first half of 2008, the UK may have entered a mild recession that will hopefully prove short-lived."