The CBI predicts that even though Q4 of 2009 saw a .5% growth it is likely that in the first half of 2011 there will only be a .3% increase.  This will likely be followed by a meagre .5-.7% increase by the end of 2011 making any growth fragile according to the deputy general of CBI, John Cridland.

Cridland added that to think that Britain will be out of the recession before 2011 would just be ‘kidding ourselves.’

The CBI also stated that in 2011 the UK GDP growth will only be about 2.5% following its prediction of 1.2% in 2010.

Cridland also stated that households and businesses will continue to struggle in the next two years and that it will be especially hard during the beginning of 2010 since several stimulus plans such as the scrappage scheme and VAT cut will end.  He stated that with these factors in mind the CBI is not as upbeat about the growth rate of the GDP as the Chancellor is.

Alistair Darling stated in his pre-budget report that the GDP may grow as much as 3.5% in 2011 which the CBI counters by stating their main wish of the New Year was to get a better grip on the state of public finances.

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As increasing deficits are hindering competitiveness, directors of eight out of ten companies told the CBI that their final salary schemes are going to come to an end.

The official report from the CBI said that as firms are starting to restructure to get ready for recovery from the poor economy the attention is turning to widening pension deficits since they are impairing recovery efforts.

Most of the final salary pension schemes do not accept new members with membership closed earlier in the decade, but now even those who are already existing members may see a change in their terms.

The CBI reports that 73% of businesses in the UK are fearful that they will need to increase payments in order to continue funding the schemes already in place.

Deputy General of the CBI, John Cridland, stated that firms are not ignoring their obligations to those who are enrolled in pension schemes, but that the firms need to get themselves back into a fit shape in order to take an active role in the economic recovery.

Cridland added that the cost of running such pensions is damaging the UK business’s ability to compete in the market and that the cost of continuing to run final salary pensions is unpredictable and high.

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