THE UK economy will continue to struggle this year, with a "subdued" domestic backdrop meaning it is likely to grow by 1%, the Confederation of British Industry data forecast.

This pace of expansion, in the CBI's latest quarterly economic predictions out today, is less than half of the UK's average annual trend rate of growth of about 2.5% before the Great Recession of 2008/09. While believing recent economic data had been "more promising", the CBI declared: "Clear challenges remain both at home and abroad."

It has thus decided not to upgrade its 2013 UK growth forecast from 1%, having cut it to this rate in February, from 1.4% in its previous quarterly prediction.

Highlighting UK economic weakness, the CBI said its 1% growth projection reflected "an expectation that the domestic economy will grow at a subdued pace, while a more supportive global backdrop will generate an improvement in the net trade contribution".

The CBI forecasts UK unemployment will remain elevated. It expects unemployment on the International Labour Organisation measure, which stood at 2.56 million in the December 2012 to February 2013 period, to have peaked at 2.6 million in the first quarter. It predicts it will then fall only slowly, forecasting ILO unemployment will stand at 2.47 million, a rate of 7.7%, in the fourth quarter of 2014.

In contrast to economies such as the US and Germany, which are back above their pre-Great recession levels of output, the UK remains stuck significantly below its previous peak.