A CBI forecast has predicted a ‘shallow recession’ during the final part of 2008 and that growth in the economy in 2009 will be the lowest since 1992.
The CBI’s latest economic forecast has revised its growth predictions for 2008 and 2009 due to the sharper than expected slowdown over the first half of this year. Their forecast takes into account the impact of weak consumer demand, high energy and commodity prices and the effects of the credit crunch.
Richard Lambert, CBI Director-General, said: “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. Growth in 2009 will be feeble at best.”
“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. This is not a return to the 1990s, when job cuts and a slump in demand were far more prolonged.”
“The squeeze on household incomes and company profit margins from higher costs will begin to ease as the price of oil moves downwards and, although the credit crunch will be with us for some time, conditions are set to improve later in 2009.”
Ian McCafferty, CBI Chief Economic Adviser, said “We now appear to be in a mild recession which will run to early next year. The outlook remains very uncertain, but we do not expect the falls in output to be prolonged, and should start to see signs of a recovery in the second half of 2009.”