Britain ‘to suffer low growth year’

Britain will avoid the dreaded double-dip recession in 2012, but will face a year of very low growth before things pick up in 2013, according to the Confederation of British Industry (CBI).

The CBI has said 2012 will see the UK economy expand by just 0.9 per cent, with the first half of the year seeing the country suffering from uncertainty over the future of the eurozone and the first two quarters seeing Gross Domestic Product (GDP) rising by just 0.2 per cent.

In the second half of the year, matters will start to improve as the squeeze on incomes lessens due to falling inflation, it predicted, with the third and fourth quarters seeing GDP rise by 0.6 per cent and 0.5 per cent respectively as consumer spending grows.

The CBI predicted that this improvement will also allow the economy to grow by two per cent next year.

CBI director general John Cridland said: "Economic conditions will continue to be tough, especially in the first half of the year, and the UK recovery will depend on the successful resolution of the Eurozone crisis.

"But some activity has picked-up since before Christmas and the mood among many businesses has improved, with exception of companies serving the UK consumer where business remains flat."

However, the report noted that this outlook will still produce an increase in unemployment, with the jobless total peaking at 2.9 million.

And for those who have mortgages, the loss of jobs could lead to an increase in repossession figures.

The latest figures from the Council of Mortgage Lenders (CML) have indicated a recent rise in the number of homes being taken back by lenders.

It noted that while the total number of these in 2011 – 36,200 – was the lowest for any year since 2007, the tally of 8,500 in the final quarter of the year was up by 400 on the same period in 2010.

CML director general Paul Smee said the organisation is concerned there will be a rise in repossession in 2012 due to economic problems like unemployment.

By James Francis