CBI expects worst slump since 1980

According to the Confederation of British Industry (CBI), the UK economy will recede at its fastest rate for nearly 30 years in a period where the Gross Domestic Product (GDP) will fall by 3.3 percent compared to the 1.7 percent stated in November.

The latest predictions indicate that by the end of 2009, it will be six consecutive quarters of decline in the economy, hence the latest announcement that the recession will be longer and deeper than first thought.

The UK economy will shrink at almost twice the pace previously forecast this year as the credit famine plunges the nation deeper into the worst recession in almost 30 years, the CBI said.

Richard Lambert, the CBI’s director general, told Bloomberg news that the world has changed dramatically and the combination of the global confidence crisis and UK credit restraints have tied the hands of many UK firms.

The main impact of the recession, according to some, has yet to be met as stretched public finances are expected to reach £149 billion in 2009/10 and by 2011 represent 11.8 percent of GDP, which is well above previous forecasts.

The British Chambers of Commerce said that businesses have indicated that relationships with local bank managers are deteriorating and that the Government’s VAT cut has done little to help avert the recession.

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