UK recession ‘worse than thought’ says CBI

The UK recession will be longer and harder than had initially been thought, the CBI has warned.

The business group has now downgraded its economic forecast from a 0.3% fall to a huge 1.7% drop in 2009, and has also predicted that unemployment will hit 2.9m by 2010.

The organisation blamed the September banking crisis and the continuous wave of bad news that was affecting both business and consumer confidence for the deterioration in conditions.

"The fast-moving and global nature of this crisis means it is impossible to look far ahead with any certainty," said John Cridland, deputy director general at the CBI.

"What is clear is that the short and shallow recession we had hoped for a matter of months ago is now likely to be deeper and longer lasting."

The CBI estimates economic growth will fall by 0.8% in the final quarter of 2008 before starting to recover in late 2009. It also forecast interest rates falling to 1.5%.