Organisation forecasts slow and fragile recovery with business investment improving in 2010

The UK economy will have exited recession in the last three months, according to the latest forecast from the CBI.

The organisation said the economy will grow slowly, by 1.2% in 2010, and by 2.5% in 2011, meaning that by the end of 2011 output will still not have returned to pre-recession levels.

It added that business investment, which has fallen heavily throughout 2009, should start to recover in the spring of 2010 but is likely to remain hindered by excess capacity, weak demand, and credit supply issues.

John Cridland, CBI Deputy Director-General, said: "The outlook is brightening as the global economy finds its feet, although we will need to keep our nerve during early 2010, and there is no sign of a clear driver of strong economic growth.

"In the spring many staff will face another cycle of wage freezes, and job losses will continue rising until the autumn.”