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CBI: Economy starting to stabilise

Jun 15 2009

The UK economy has left behind the worst of the quarterly falls in gross domestic product (GDP), a new forecast claims.

According to the Confederation of British Industry (CBI), GDP will begin to flatten in the second half of 2009, due to factors such as the Bank of England's quantitative easing programme and low interest rates.

The group then suggests that modest growth will return in 2010 with a 0.1 per cent rise in GDP tipped for the first quarter of the year and a 0.3 per cent increase expected in the second.

In addition, the forecast predicts that by the end of the recession the UK economy will have contracted by a cumulative 4.8 per cent - less severe than the 5.9 per cent experienced in the early 1980s.

However, Richard Lambert, CBI director general, suggests that some commentators are reading too much into evidence of 'green shoots' in the economy.

Lambert explains: 'It will take some time before we can be sure these shoots have roots we can depend on for sustainable growth and, in the meantime, the government must do everything it can to help firms get access to credit.'

The CBI forecast follows last week's National Institute for Economic and Social Research report, which claimed UK GDP rose in April and May.

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