THE outgoing director-general of the CBI has warned that the early part of 2011 will be “volatile”.

Richard Lambert, who will be replaced by John Cridland next month as head of the business group, does expect the second half of next year to be better, with private sector trade and investment forecast to pick up.

Mr Lambert said: “There are bumpy times ahead for businesses in Britain. Travelling around the country, I find that many people are positive about current trading conditions – but extremely uncertain about what the New Year might bring.

“That’s understandable, because the economic and political outlook both seem volatile over the short term.

“For a start, the pace of economic recovery could slow quite markedly in the first few months of 2011.

“The VAT increase will be taking effect, and the construction sector will start to feel the pain of public spending cuts. The positive impact of the inventory cycle may also start to wane, with companies having gone some way to refilling the stock pipelines that had been run down so sharply in the recession.”