The Confederation of British Industry painted a grim picture for the economy saying it was not likely to recover until after 2009.

As the credit crunch starts to bite, the CBI’s quarterly forecast estimated the county’s economic growth would only be 2% next year, down from the 2.2% estimate in September and a marked fall on the 3% growth the UK has enjoyed this year.

Figures also predict rises in unemployment to 1.7 million, a tumble in consumer spending down to 1.9% from 3.1% this year and growth in investment for companies will ease to just 1.8% from 5.7%.

However, there was brighter news from the stock markets with the FT reporting initial offerings by private equity-backed companies in the UK and Germany outperforming the stock market and other IPOs according to two academic studies.

Investors buying an equal share in every IPO of a private equity-backed company since 1990 and selling after 36 months would have achieved 3.3 times the FT All-Share index, according to a UK study backed by Citigroup.