The CBI has released an optimistic forecast for the UK economy, saying it should return to growth in the second half of the year.
They are also forecasting faster growth in 2013.
The CBI expects to see economic growth, as measured by GDP, of 0.6% in 2012. This is slightly lower than its previous forecast in February of 0.9%, as a result of the recent return to recession.
They are predicting GDP growth of 2% in 2013.
In the shorter term, growth in the second quarter of 2012 is expected to be flat at 0% as a result of the additional Bank Holiday for the Diamond Jubilee celebrations. A slight boost from the Olympics should improve the economic position during the second half of the year.
The CBI believes that household spending will remain subdued in 2012, as weak wage growth and rising unemployment has an impact on consumer confidence.
Assuming inflation continues to fall, they see household spending improving in 2013 as disposable incomes begin to recover.
Whilst this latest forecast from the CBI brings some much needed optimism to the UK economic outlook, it is worth noting that these predictions have a nasty habit of changing at short notice.
Optimism expressed today for the second half of the year could quickly be replaced with a more pessimistic outlook, particularly if the situation in the eurozone worsens.
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