LONDON Britain's economy now looks likely to sidestep recession entirely this year but deep-rooted problems like weak business investment will persist, the Confederation of British Industry trade body said on Monday.

The economy is on course to expand 0.4% this year and 1.8% next year, the CBI said, compared with its previous forecast for a 0.4% contraction followed by growth of 1.6% in 2024.

Falling energy prices, the reopening of China's economy from COVID-19 restrictions and easing supply chain disruptions were the main reasons for the upgrade, the CBI said.

Other forecasters like the Organisation for Economic Co-operation and Development and International Monetary Fund have also bumped up their growth forecasts for Britain recently.

"While encouraging, there's no getting away from the fact that this year will be another tough one for both businesses and households," CBI lead economist Alpesh Paleja said, noting that the Bank of England looks likely to raise interest rates to a peak of 5% by August from 4.5% now.

"It's also concerning that the UK is underperforming on many of the areas crucial to our long-term prosperity, such as business investment and trade intensity," he said.

The CBI does not expect business investment - a weak spot for Britain's economy since the Brexit vote of 2016 - to return to its pre-pandemic level before the end of next year.

"Making our business environment more attractive to firms at home and abroad must be front of mind in the months ahead," Paleja said.

(Reporting by Andy Bruce; editing by David Milliken)