British economy is forecast to be flat this year, but may make a modest pick-up in the next two years, said the Confederation of British Industry (CBI) on Thursday.

The CBI predicted that the growth of Britain's gross domestic product (GDP), which measure the value of everything produced in the country, will be zero in 2012, which is slightly above its previous forecast of a drop of 0.3 percent.

The economy would grow by 1.4 percent in 2013 and slight stronger in 2014, the CBI forecast.

It warned that the external risks to the outlook remained on the downside, such as the continuing eurozone crisis and the impact of inflation.

The inflation is expected to be close to the 2 percent target set by the central bank by the end of next year, given subdued underlying conditions, the institute said.

It also forecast a small rise in unemployment in the first half of 2013, but improvement in the second half.

The weak outlook for eurozone growth continues to depress export prospects, as its report noted that "net trade is likely to be flat this year, followed by an increase of 3.7 percent next year as conditions in the global economy improve."

"Prospects for next year are somewhat brighter, when we expect some modest strengthening in household consumption to put the recovery on a slightly firmer footing," said Anna Leach, CBI Head of Economic Analysis.

"Though inflation is likely to be higher in 2013 than we previously anticipated, the labour market is expected to be a little more resilient over the year," she added.

Britain had been in recession for nine months starting from the last quarter of 2011, but regained growth in the third quarter of this year with an increase of 1.0 percent as it was boosted by Olympic Games, official data showed.

Xinhua