Triple-dip recession unlikely but eurozone fears remain, says CBI

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the CBI has cut its UK growth forecast for this year, but said the UK should avoid a triple-dip recession.

The business body expects the economy to grow 1 per cent, less than its previous estimate of 1.4 per cent, warning that the potential for a new “flare-up” in eurozone tensions was likely to keep confidence and growth in check.

But it said a rise in job vacancies and an improvement in business sentiment since its last forecast suggested the economy would avoid another recession and grow 0.3 per cent in the first quarter of this year.

Hopes that Britain will avoid a triple-dip recession have been boosted by surveys that showed the services sector returned to growth in January and manufacturing output rose at its fastest pace since September 2011.

CBI director-general John Cridland said: “We are beginning to see the return of organic growth, with clear signs that firms offering the right products into the right markets are growing sales and expanding.”

But he said the potential for eurozone tensions to flare up, coupled with tough conditions in the domestic market, explained why business confidence remained patchy.

He said: “The fear of external storm clouds lingers.”