23/09/2009 - Growth 'to stall when VAT reinstated'
Economic growth will slow after the reversal next January of last year's cut in VAT, according to the CBI.
The industry organisation is warning that demand will slacken after consumers do their spending before the deadline passes.
By that time, it says, the boost from firms replenishing stock levels may be over, resulting in growth falling to 0.1% from the 0.4% of the last quarter of this year.
CBI director general Richard Lambert says there appears to be "no clear driver" of robust growth going into 2010.
But he says: "The outlook is improving as the UK draws strength from quantitative easing, a weak pound and a recovering global economy.
"Although growth this quarter should mark the end of the recession, conditions in the UK will remain tough for some time yet, and it is difficult to see where demand growth will come from."
He predicts that shrinking by 4.3% by the end of this year, GDP will grow by 0.9% in 2010, with unemployment peaking at three million in the second quarter.
Copyright © Press Association 2009
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