by Trevor Sturgess

Economic recovery will be sluggish for the next 12 months, according to the .

The employers’ organisation claimed the country was in a "fiscal mess" and predicted that the economy would not pick up much pace until the middle of next year.

Just ahead of Wednesday’s Budget , it has called on the Government to set out a credible plan to balance the books by 2015-16, two years earlier than currently planned, and "avoid damaging tax rises."

Richard Lambert, CBI director-general, urged targeted spending cuts and smart re-engineering of public services. "At the same time, it is vital that business has the space to grow, invest and create new jobs," he said. "That’s the only way out of our current fiscal mess."

In its latest economic forecast, CBI expects growth prospects for the economy will be fragile in the near-term now that certain stimulus measures, such as the VAT cut and car scrappage scheme, are ending.

Growth in consumer spending will remain subdued this year, as people save more and worries about job security persist.

Unemployment is expected to continue rising and will peak in the autumn. But the CBI now expects the number of people out of work to be slightly lower than previously thought, at around 2.75 million.

The economy is expected to grow in the first two quarters of 2010, by 0.3 per cent and then 0.4 per cent respectively, and by a slightly faster 0.5 per cent in the next two quarters.

It forecasts that as global demand, consumer spending and business investment strengthen through 2011, the pace of growth should then pick up, though GDP is still not expected to have returned to pre-recession levels by the end of 2011. The CBI predicts annual UK GDP growth of 1.0 per cent in 2010, followed by 2.5 per cent in 2011.

Mr Lambert added: "The economic outlook is improving, but the lack of a clear driver for growth will make for a bumpy ride in the months ahead. The CBI expects the recovery in 2010 to be slow and sluggish, with few signs of real strength until well into next year."