In its latest economic forecast, the CBI said that although the UK recession was deeper than expected in the first three months of 2009, this is likely to be the worst of the quarterly falls in GDP and the recession will moderate in the second half of this year.
The CBI said the world economy has worsened since its last forecast in February and as a result it has revised its GDP growth outlook for 2009 from -3.3 per cent to -3.9 per cent.
CBI director general Richard Lambert says: “In these turbulent times it is difficult to build a clear picture of how the economy will perform, but there are a few tentative signs that the steepest phase of the recession is now behind us, and that the banking packages, aggressive monetary policy and fiscal support will steady the pace of decline from here on. The recession is by no means over, but we see a return to very weak growth by spring 2010.
“Given falling tax revenues, the shrinking economy, and alarming levels of government debt, we urge the Chancellor to avoid any further major fiscal boosts in the Budget. Budget measures should be targeted on jobs and investment, with a focus on efficiency savings and public service reform.”
Liberal Democrat Shadow Chancellor, Vince Cable said: “It is futile to get involved in a forecasting competition. All we can sensibly discuss is what is actually happening. That is unemployment growing rapidly, more and more families struggling to pay their mortgages, the growth of negative equity and an unrelenting budget deficit.
“We are undoubtedly in the middle of a major economic crisis, compounded by the reluctance of banks to lend. No amount of spinning by Government can avoid these simple brutal economic facts which the budget has to address.”