16 September 2008
The UK has entered a technical recession, with growth in the economy in 2009 predicted to be the lowest since 1992, according to the latest statement from the CBI.
The business group said that forecasts for economic growth have been "shaved lower and lower" as the economy has continued to struggle with the twin impact of higher energy and commodity prices and the credit crunch.
The CBI added that unemployment will break the two million mark next year, reaching 2.01 million and a jobless rate of 6.5 per cent.
However, CBI director-general Richard Lambert said that conditions were set to improve later in 2009:
"The squeeze on household incomes and company profit margins from higher costs will begin to ease as the price of oil moves downwards and, although the credit crunch will be with us for some time, conditions are set to improve."
Ian McCafferty, CBI chief economic adviser added:
"The Bank of England's hands have been tied in recent months by the relentless rise in inflation. But with oil prices heading lower, very weak economic activity for a good number of quarters, and little evidence of wage pressure, interest rate cuts will soon be justified, and will provide welcome relief to households and businesses."