Concurring with the majority of economists, the business body said that the UK economy would end its recession in the fourth quarter of the year, following on from the surprise third quarter of negative growth that placed the UK behind the majority of its foreign economic peers in its recovery.

The CBI predicted that economic output would not return to its pre-recession level until the end of 2011, with GDP predicted to grow by 1.2% in 2010 and 2.5% in 2011.

However, it cut its unemployment forecast to 2.8m, predicting that it will reach its peak in autumn 2010.

John Cridland, CBI deputy director-general, said: "The outlook is brightening as the global economy finds its feet, although we will need to keep our nerve during early 2010, and there is no sign of a clear driver of strong economic growth. In the spring, many staff will face another cycle of wage freezes and job losses will continue rising until the autumn.

"Although the first few months of 2010 will be difficult, growth will gradually pick up and increasing confidence and demand will lead the UK into a more positive 2011. Consumer spending looks to be slightly more resilient than we first thought, and a weaker pound will help to support export growth.

"However, the economy will be on a fragile path of very slow growth, as we continue to feel the lasting effects of the financial crisis. And it remains vital that government sets out clearer plans to address the fiscal deficit at its next opportunity in order to help shore up future UK economic prospects."

The forecast came as Experian, the credit rating agency, reported that business strength had improved and corporate insolvency had fallen in November, with small  businesses among the most secure.

Companies in the print, paper and packaging sectors recorded just three insolvencies during November 2009, the company said.