It predicts UK GDP will grow by 0.3% between July and September from the previous three months, and will rise by 0.4% between October and December.

However, it said a lack of demand meant it was hard to foresee rapid growth.

January's increase in VAT would dampen spending, it warned, while firms would be "cautious" in raising output.

Growth in the three months to the end of September would follow five consecutive quarters of contraction which has seen UK GDP fall by a cumulative 5.5%.....