Business group predicts 'fragile' UK economic recovery

The Confederation of British Industry (CBI) has forecast a 'fragile' recovery for the UK economy in 2010.

The CBI said that the UK economy was expected to come out of recession in the fourth quarter this year, buoyed by increased spending from consumers looking to buy before the January VAT increase.

It anticipates businesses rebuilding their stocks, supported by higher household spending and a global economic recovery leading into 2011.

However, it warned that economic growth would be weak, at around 0.3%, for the first two quarters of 2010, with wage freezes continuing into spring and job losses until the autumn.

The business group then foresees strengthened growth of 0.5% to 0.7% each quarter through to the end of 2011.

John Cridland, CBI deputy director-general, warned that the start of 2010 will see the economy on a "fragile path of very slow growth", as the UK rides out the lingering effects of the financial crisis, though increasing confidence and demand will see the economy head into "a more positive 2011".

"Consumer spending looks to be slightly more resilient than we first thought, and a weaker pound will help to support export growth," he added.

The predictions follow British Retail Consortium research which found that retail was beginning to pick up in November - especially in London, which showed the best growth in three years.