CBI forecasts return to growth in 2010

The UK economy will experience "modest growth" in the second half of 2009, the CBI has forecast, revising its more pessimistic predictions set in June.

Companies ending a process of aggressive de-stocking and beginning to rebuild inventories was cited as the principle cause behind the anticipated recovery.

However, the business body warned that growth in 2010 would be "very weak" in the first quarter and remain "feeble" for the rest of the year.

Overall, the CBI forecast that GDP would grow by 0.9% in 2010 following a 4.3% contraction in 2009 and it warned that "consequently the economic climate is still likely to feel difficult".

Ian McCafferty, the CBI's chief economic adviser, said: "The end of the dramatic de-stocking that characterised the first half of the year has allowed manufacturing output to stabilise, but order books remain depressed, and the outlook uncertain."

In addition, the CBI forecast that unemployment will peak at around 3m by early 2010 – a sharp increase from the 2.5m today.