UK set for shallow recession

19 September 2008

Britain will experience a shallow recession in the second half of this year, while next year’s economic growth will be the lowest since 1992, according to an industry expert.

The Confederation of British Industry (CBI) cut its growth forecast from 1.7 per cent to 1.1 per cent for the remainder of 2008, and slashed its 1.3 per cent growth forecast for 2009 to 0.3 per cent.

However, the CBI do expect the economy to start to recover at some point in 2009. The CBI`s Director-General, Richard Lambert said: “This is not a return to the 1990s, when job cuts and a slump in demand were far more prolonged. Although the credit crunch will be with us for some time, conditions are set to improve later in 2009. The Bank [of England] should have leeway to cut interest rates.”

The prediction will be welcomed by those worried about a more severe downturn over the coming year, with the credit crunch and rising costs of living threatening to leave many people struggling with debt.

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