The UK economy will enter into a period of modest growth, in the third and fourth quarters of this year, according to the Confederation of British Industry.

The CBI says that UK GDP will post quarter-on-quarter growth of 0.3% in 2009 Q3, increasing by 0.4% into Q4 as consumers bring spending forward ahead of the VAT increase in January.

However, the CBI warns that although companies may be rebuilding stocks, they are likely to do so very cautiously.  As a result, 2010 should begin with very weak growth of only 0.1% in Q1 2010, and 0.3% in Q2.??

Richard Lambert, director-general at CBI, 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.?

“Firms that have run down their stocks will now be starting to raise output to meet demand, and consumers are likely to bring forward spending before VAT rises. But once these two boosts are out of the way there is no clear driver of robust economic growth into 2010.