By: Caterina Glenn
Feb. 13 (Bloomberg) — The U.K. economy will escape a recession and the recovery will gain momentum this year, avoiding the need for more quantitative easing by the Bank of England, the Confederation of British Industry said.
“After a pretty stagnant winter where we flatlined, we think growth is starting again because we’ve got tentative signs of optimism,” CBI Director-General John Cridland said in an interview in London on Feb. 10. “There will be marginal growth” this quarter and “we’re not assuming in our growth forecasts that there will be a further package of QE.”
The Bank of England announced its latest round of bond purchases on Feb. 9 after the economy shrank in the fourth quarter amid turmoil from the euro-area debt crisis, bringing Britain to the edge of a recession. Cridland said sentiment had improved in recent weeks as signs of “stabilization” emerged in Europe and the global economy showed signs of resilience. Stocks advanced today and the euro strengthened after Greek lawmakers approved austerity plans to secure rescue funds.
“Economic conditions will continue to be tough, especially in the first half of the year, and the U.K. recovery will depend on the successful resolution of the euro-zone crisis,” Cridland said. “Although risks remain, we expect growth this year, improving modestly in 2013, primarily driven by positive net trade and business investment.”