Global economies will begin to grow again by the end of the year but UK markets may be slower than others to recover, the Centre for Economics and Business Research (CEBR) said today.
In its most recent economic forecast, the independent consultancy firm said they could make clearer predictions regarding the financial sector as things began to stabilise, but warned the long-term impact would affect some countries more than others.
Chief executive Douglas McWilliams went on to praise G20 leaders for their willingness to search for a solution at last week's meeting in London, but said the measures they agreed upon were unlikely to have any real affect.
CEBR predicted world GDP would start to rise again, with a two to three per cent increase by the end of 2009 as limits imposed on importing new products and materials were lifted. The report added that as rescue and stimulus packages began to take effect, inter-bank and mortgage lending would increase and the overall economic situation would stabilise.
But the forecast also sounded a note of warning that job losses and pay cuts would "squeeze" spending for some months to come, and Britain was one of the countries where it would take some time for recovery to be completed.
Mr McWilliams said: "While the depth of the recession will probably be fairly similar in most advanced economies, what will separate the sheep from the goats will be the pace of the recovery. Even globally, the cost of damaged banks, the increased barriers to risk taking, the impact of increased regulation and the effects of restoring public finances will hold back the recovery.
"And in the UK the damage to some of the banks, the knock on effect of the hits to the financial service sector and the long term implications of restoring our catastrophic public finances means that growth in the recovery phase is likely to be relatively slow by international standards."
He added the growth of the UK economy would be limited to one to two per cent over the next few years.
Speaking about the work of global leaders at the G20 summit, Mr McWilliams said although the meeting had boosted confidence around the world, the trillion dollar stimulus package would have little effect in the short term.