12 February 2013 Last updated at 19:22 ET
The UK will avoid falling into a so-called triple-dip recession, according to the business lobby group, the CBI.
The group believes that the UK economy will grow 0.3% in the first quarter of the year.
That comes after the economy shrunk in the last quarter – the first period in what some feared might be another six months of negative growth.
But the CBI now expects the UK to grow 1% in 2013 – less than the 1.4% it previously expected.
“We are beginning to see the return of organic growth, with clear signs that firms offering the right products into the right markets are growing sales and expanding,” said CBI director-general John Cridland.
“Recent business surveys also give grounds for cautious optimism about our forward prospects.”
But he warned that “after the uncertainties of 2012, the fear of external storm clouds lingers”, referring to the eurozone debt crisis and weak global growth.
The business group said that inflation will likely climb during the year but it does not expect a further round of quantitative easing.
The Bank of England has so far pumped £375bn into the financial system, creating money through “asset purchases” of buying government bonds.
Earlier this month, the Organisation for Economic Co-operation and Development (OECD) said the Bank should consider injecting more money into the economy if growth remains weak.
The UK economy bounced back to growth in the third quarter of last year, boosted by the Olympics, after shrinking for the previous nine months. Prior to that, the UK was in recession at the height of the financial crisis in 2008.
If the economy were to also shrink in the first three months of 2013, then the UK would re-enter recession, defined as two consecutive quarters of contraction.
The UK has still not recovered the levels of output seen before 2008.
BBC News – Business
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