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Sunday 09th of January 2011
January 20, 2010    

CBI raises concerns over acquisitions

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by Kay Murchie

Business group the Confederation of British Industry (CBI) has warned of a “fragile” recovery this year but the group is predicting that the economy will have exited recession in the fourth quarter.

The economy, which has now contracted for six consecutive quarters, has been lagging behind other economies and is now the last major economy that is still in recession.

Official figures on 26 January will confirm whether the economy saw positive growth in the fourth quarter.

However, the CBI has warned against businesses embarking on acquisitions as the economy improves.

Director General of the CBI, Richard Lambert, told the Financial Times that businesses will start to think about acquisitions again.

However, he warned that companies exploring opportunities to grow their business faced “big head winds.”

“We know for a fact that most acquisitions don’t deliver what the bidders hope from them, so I think some people may get a bit carried away on that front,” he said.

Meanwhile, in terms of growth, the CBI estimates that the economy will expand by 1.2% this year and 2.5% in 2011 - much lower than Government forecasts but in line with recent forecasts from the International Monetary Fund (IMF).

In related news, the Office for National Statistics (ONS) has today revealed that UK unemployment fell by 7,000 in the three months to November to 2.46 million.

Furthermore, the number of Britons claiming jobseeker’s allowance (JSA) fell by more than expected in December, down 15,000 to 1.61 million - its biggest amount since April 2007.

The figures will almost certainly boost hopes that the UK economy is on the road to recovery and is emerging from its worst recession on record.

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