Britain will avoid a double dip recession and modest growth should restart later this year, according to business lobby group the CBI.
In its latest economic forecast, the employers' organisation expects growth of 0.9% in 2012 and 2% next year.
It also says companies are starting to invest in new equipment and in finding new export markets.
Consumers and households face a subdued outlook due to high unemployment and squeezed living standards, it adds.
The CBI thinks the UK will avoid an official recession - two quarters of declines in a row - by bouncing back from its 0.2% fall in the last three months of 2011 to growth of 0.2% in the first quarter of 2012.
It predicts another 0.2% rise in the second quarter of this year before speeding up a little later in 2012.Weak wage growth
CBI director general John Cridland said: "Economic conditions will continue to be tough, especially in the first half of the year and the UK recovery will depend on the successful resolution of the eurozone crisis.
"The pressure on household incomes will also ease slightly in the second half of this year as inflation falls, resulting in a slight increase in consumer spending.
"But weak wage growth and high levels of unemployment will continue to be a brake on household spending."
The lobby group believes the manufacturing sector will expand this year as exporters find new markets and invest in new equipment.
And it said it was encouraged by cash injections from the European Central Bank and core eurozone countries were seeing signs of stabilisation.