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Monday 19th of July 2010
September 23, 2009    

CBI: Recession ended Q3 but growth will be fragile

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by Kay Murchie

The Confederation of British Industry (CBI) today said that the UK economy probably exited recession during the July to September period but warned that growth next year will be ‘fragile‘.

The business group is forecasting that GDP will expand by 0.3% in the third quarter, compared with the second quarter and will grow by 0.4% between October and December.

Britain’s economy has contracted by 5.5% in the past five quarters, the largest fall in thirty years, but many other business leaders believe the recession ended this quarter, as a result of positive economic data.

Meanwhile Richard Lambert, the CBI director general, said the quantitative easing programme and global economic recovery means the short-term outlook for the UK was “brightening”.

However, Mr Lambert said the long-term outlook is not so positive and “the next 18 months are going to be quite tough“ he told the BBC.

Worryingly, unemployment is expected to continue to rise. The Office for National Statistics recently revealed that unemployment grew by 210,000 to 2.47 million in the three months to July - the highest level since 1995.

The CBI believes unemployment will peak at around 3 million in the second quarter of next year, with many experts predicting around the same.

However, the Centre for Economics and Business Research recently predicted that unemployment could reach 4 million - worse than the record high in the 1980s under Margaret Thatcher’s leadership.

Finally, the dire state of the public finances, as well as a severe drop in business investment, are both big concerns, according to the CBI.

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