CBI: UK to avoid triple-dip recession

John Cridland
Image caption The CBI's John Cridland says he has become more optimistic in recent weeks

The UK will avoid falling into a so-called triple-dip recession, according to the business lobby group, the CBI.

The group believes that the UK economy will grow 0.3% in the first quarter of the year.

That comes after the economy shrank in the last quarter of 2012 - the first period in what some feared might be another six months of negative growth.

But the CBI now expects the UK economy to grow by 1% in 2013 - less than the 1.4% it previously expected.

CBI director-general John Cridland told the BBC's Today programme he was a bit more optimistic than he was a month ago.

"During January I'd just begun to see signs that small, medium and large companies - particularly those exporting and beginning to get some benefit from the eurozone crisis moving away a little bit and the slightly better news from America - are feeling optimistic about what will come next.

"At the moment the economy's pretty flattish but I think there's just signs we might be edging upwards," he said.

Building projects

Mr Cridland also said that focusing on infrastructure spending was "absolutely the right thing" for Chancellor George Osborne to do in the Budget on 20 March.

"He put a lot more into capital spending back in December in his Autumn Statement. I'd like to see him do more of the same," he said.

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Media captionCBI's John Cridland: Can the government get the system moving?

The Group of Thirty - a body made up of senior international economists - has warned that far-reaching reforms are needed to assist global investment in areas such as infrastructure, which is critical for growth.

Mr Cridland said the UK government had the right plan for growth but the question was whether or not it could get the system moving.

He said the government should look at projects which could have a quick impact.

"My message to the government now is... give local authorities a bit more money to fill some of those winter snow potholes, get some more houses built - because pothole filling and housebuilding can be done in months, not years."

Inflation report

The business group said that inflation was likely to accelerate during the year but it does not expect a further round of quantitative easing.

The Bank of England said in its latest inflation report on Wednesday that it now expected inflation to remain above its 2% target for two years.

It had previously said that inflation would fall back towards its target in the second half of this year.

Under quantitative easing, the central bank has so far pumped £375bn into the financial system, creating money through "asset purchases" of buying government bonds.

Earlier this month, the Organisation for Economic Co-operation and Development said the Bank should consider injecting more money into the economy if growth remains weak.

The UK economy bounced back to growth in the third quarter of last year, boosted by the Olympics, after shrinking for the previous nine months. Prior to that, the UK was in recession at the height of the financial crisis in 2008.

If the economy was to shrink in the first three months of 2013, then the UK would re-enter recession, defined as two consecutive quarters of contraction.

The UK has still not recovered the levels of output seen before 2008.

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