UK to avoid double-dip recession, CBI says

Car production at Toyota factory in Derbyshire The manufacturing sector is forecast to expand this year as exporters find new markets

The CBI has predicted the UK will avoid a double dip recession, but two other surveys suggest the economy may worsen.

The employers' organisation, the CBI, said it expected growth of 0.9% in 2012 and 2% next year.

However, a separate survey from services firm BDO suggests company turnover continues to fall, indicating a recession is likely.

And the Chartered Institute of Personnel and Development (CIPD) found employers more likely to lay off staff.

The CBI published its predictions in its regular economic forecast.

It found companies were starting to invest in new equipment and in finding new export markets.

The lobby group believes the manufacturing sector will expand this year as exporters invest in new equipment.

It thinks the UK will avoid an official recession - two quarters of declining output in a row - by bouncing back from its 0.2% fall in the last three months of 2011 to growth of 0.2% in the first quarter of 2012.

Turnover falls

However, the BDO survey of companies' turnover found it had fallen for the eighth month in a row.

The BDO's output index fell to 91.2 in January from 91.4 in December, where any figure below 95 indicates contraction.

"Undoubtedly, prospects for growth continue to be fragile - as the UK has already very likely entered a technical recession and the situation in the eurozone remains difficult to predict," said BDO partner Peter Hemington.

Unemployment

The CBI also warned that the economy would remain difficult.

"When the storm clouds are absolutely over your head, you're looking for some sense of light on the far horizon," CBI director general John Cridland told the BBC.

"I think the conclusion we've come to is that the worst part of the downturn over the winter was actually in October... I think in December and into January, there were very tentative signs of a pick-up."

However, the organisation warned employment was unlikely to pick up as fast.

And a survey of 1,000 employers by the CIPD found the difference between the number of employers planning on bringing in new staff and those planning on cutting staff had widened to its highest level since 2009.

The survey fell to -8 from -3, with any number below zero indicating more employers laying off workers.

"Whereas employers were in wait-and-see mode three months ago, more private sector firms, particularly among private sector services firms, have decided to push the redundancy button in response to worsening economic news," said Gerwyn Davies, public policy advisor at the CIPD.

The body warned unemployment could reach 2.85 million unless economic conditions improved.

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