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CBI: recovery will be slow and sluggish

THE UK economy will not recover to pre-recession growth levels even by the end of next year due to dire high street trading and the end of stimulus schemes, the CBI has warned.

The employers’ group said GDP would grow by one per cent this year and by 2.5 per cent in 2011. Nervousness among consumers, who are loathe to spend after the VAT hike, and the removal of programmes like the car scrappage deal were said to be two serious headwinds.

While the CBI said inflation would fall below two per cent at the end of 2010, unemployment is expected to peak in the autumn at around 2.75m. The fear of job losses will be another factor prompting consumers to keep their purse strings tight.

CBI director-general Richard Lambert 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. We expect the recovery in 2010 to be slow and sluggish, with few signs of real strength until well into next year.”