The Confederation of British Industry (CBI) has warned of a sluggish rate of economic growth at the start of 2011.

The pace of economic recovery is expected to slow to 0.2 per cent quarter-on-quarter in Q1 2011, when consumer spending falls in response to higher VAT.

Barely more promising growth of 0.4 per cent, 0.5 per cent and 0.5 per cent is predicted over the remaining quarters of 2011.

Quarterly growth rates are expected to pick up more momentum during 2012, with the economy forecast to expand by 2.4 per cent over the year as a whole.

Ian McCafferty, CBI chief economic adviser, says, ‘The pace of recovery in the UK economy has been slightly stronger over the past year than we and many others had expected, and somewhat faster than typical during the first year out of a recession. But we do not expect that rapid pace of growth to continue over the next two years of recovery.’