Business group, the Confederation of British Industry (CBI), has warned of a “fragile” recovery next year.
However, the group is predicting that the economy will emerge from recession in the fourth quarter.
According to John Cridland, CBI deputy director general, growth will gradually pick up but the first few months of 2010 will be difficult.
“Consumer spending looks to be slightly more resilient than we first thought, and a weaker pound will help to support export growth“, he adds.
“The economy will be on a fragile path of very slow growth as we continue to feel the lasting effects of the financial crisis,” said Mr Cridland.
The group believes that the economy is unlikely to have returned to pre-recession levels by the end of 2011.
In line with forecasts from the International Monetary Fund (IMF), the CBI said the economy would expand by 1.2% in 2010 and by 2.5% the year after.
It was hoped that the economy would exit recession in the third quarter but figures showed that it contracted by 0.3%.
However, it is hoped that official figures due to be published tomorrow may reveal that the economy stopped contracting in the third quarter.
The UK has been lagging behind other economies and is now the last major economy that is still in recession.
In the meantime, the CBI expects unemployment will peak at 2.8 million - lower than initial estimates.
Last week, the Office for National Statistics today revealed that UK unemployment rose by 21,000 in the three months to October to 2.491 million, taking the unemployment rate to 7.9% - a 13-year high.
However, the increase was slower than expected and was the smallest quarterly rise since March-May 2008.
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