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“Slow and sluggish” UK economy in 2010 forecasts British Industry

Chancellor Alistair Darling still short of £ 10 billion says CBI

The UK economy is in for a “bumpy ride” in 2010, according to a report from the UK's largest employers' group. Growth will remain fragile and the economy will be “slow and sluggish” as Government stimulus measures - like the VAT cut and the car scrappage scheme - are phased out, the Confederation of British Industry (CBI) said.

Its prediction comes as another report from an influential business group cast doubt on the likelihood of a recovery led by investment and consumer spending.

The Ernst & Young Item Club also said the Chancellor Alistair Darling's post-election projections for the economy and public sector finances were too optimistic.

Hetal Mehta, the Item Club's chief economist, said it was vital that Mr Darling spell out plans to bring down the fiscal deficit in Wednesday's Budget.

She told Sky News: “The Chancellor said he's not going to have an emergency Budget should the Government win the election so we really do hope we get more details this week.

”If we don't I think the financial markets will be punishing us quite severely.“

The Item club said Mr Darling needed to find an extra £10bn over the course of the next year and a further £15bn over the next parliament.

Providing interest rates stay low, it said that the UK's economic prospects would not be damaged.

The CBI report also said the Government needed a ”credible plan to balance the books” in order to convince international investors that the deficit would not derail the economy.

It went on to predict that the pace of growth would pick up in the latter part of 2011 as global demand, consumer spending and business investment strengthen. However, it expected that GDP still not to have returned to its pre-recession levels by the end of next year.