UK economy expected to stagnate until 2013

Despite the fact that the UK’s economy has recently pulled out of a double-dip recession with a 1% growth in GDP in the third quarter, experts are predicting that the economy will remain flat for the remainder of 2012.

According to the latest quarterly economic forecast from the Confederation of British Industry (CBI), GDP growth is expected to be a dismal 0% this year, just inching above previous forecasts of a fall of 0.3%.

However, the CBI forecasts that the economy will take an upturn in 2013, rising by 1.4%, reflecting improved growth figures in the third quarter. Growth is also predicted to continue into 2014, when the UK’s economy is set to lift by a stronger 2%.

The CBI also said that, although utility price rises are likely to push inflation above expected levels in 2013, inflation should be come close to its target of 2% by the end of next year.

“Despite the better than expected third quarter performance, the UK economy has bumped along the bottom this year, with overall growth fairly flat,” said John Cridland, CBI Director General.

“While we expect underlying momentum to pick up modestly next year and to be slightly stronger in 2014, the pace will remain relatively lacklustre. But, major external risks including continuing uncertainty in the Eurozone, and risks to inflation, will hit confidence and growth for some time to come.”

Chris Williamson, of data provider Markit, recently said that “there is a real risk that a return to contraction might be seen again in the fourth quarter.”

However, Anna Leach, CBI Head of Economic Analysis, said that there was reason for hope as a “modest strengthening in household consumption” next year would help put recovery on a “slightly firmer footing.”

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