UK economy won't stage full recovery this year, warns CBI

The UK economy will not stage a full recovery this year in spite of "green shoots" currently emerging, the UK's biggest business lobby said.

The Confederation of British Industry (CBI) said the economy is "still some way short of staging a full and vibrant recovery" -- something it expects to come in 2010.

The third and fourth quarters of 2009 will nonetheless perform slightly better than the CBI previously thought, it said.

It now sees a quarter-on-quarter growth of -0.1% in Q3 2009 and 0.0% in Q4, marginally improved from previous forecasts.

For full-year 2010 the employers' organisation expects growth of 0.7%, from 0.1% previously.

The improvements are due to signs that businesses' frantic destocking is now at an end, as well as a surprisingly flexible jobs market, the CBI said.

The much talked about 'green shoots' are there, according to the CBI's chief economic adviser Ian McCafferty. He said the economy has passed a "point of inflection" but warned: "How deep do the green shoots' roots go?"

Richard Lambert, CBI Director-General, said: "The return to growth is likely to be a slow and gradual one."

"Difficult credit conditions are still affecting business behaviour. For postivie growth to return, lenders need to feel more confident so that credit can start flowing again."