The Confederation of British Industry (CBI) on Monday adjusted down its growth forecasts for Britain's economy to just 0.9 percent in 2012, a little down from 1.2 percent forecast it made in November.
The CBI predicted growth will restart in 2012, but high levels of uncertainty around the economic outlook, mainly driven by the situation in the euro area, mean growth will remain subdued, particularly in the first half of this year.
But the organization believed the country will avoid another recession.
The economic growth is forecast to speed up to 2.0 percent for 2013.
Quarter-on-quarter growth will remain fragile in the first two quarters of this year to stay at 0.2 percent, and will improve modestly in the second half of the year to be 0.6 percent and 0.5 percent respectively, as inflationary pressures ease.
John Cridland, CBI Director-General, said"Economic conditions will continue to be tough, especially in the first half of the year, and Britain's recovery will depend on the successful resolution of the Eurozone crisis."
The CBI said consumer price index (CPI) inflation will fall towards target levels of 2.2 percent in the fourth quarter of 2012, and will remain close to 2.0 percent target throughout 2013.
This will relieve some of the pressure on household incomes, with consumer spending picking up slightly in the second half of this year. But households will remain cautious because of modest wage growth.
Unemployment will continue to stand at high level, likely to peak at 2.9 million in the first quarter of 2013.
Exports growth forecast to be 4.3 percent in 2012 and 6.4 percent in 2013.
"Although risks remain we expect growth this year, improving modestly in 2013, primarily driven by positive net trade and business investment," Cridland said.