LONDON - BRITAIN'S battered economy is witnessing 'green shoots' of recovery after a deep recession, but they could remain fragile for some time as the jobless toll continues to rise, analysts warn.

Major economies including Britain, the eurozone, Japan and the United States were dragged into recession last year as a result of the global financial crisis and the credit crunch, leaving many people facing a bleak winter.

But as the summer warms up shopkeepers and businessmen are reporting signs that customers have money in their pockets again, while banks are lending more, helping to steer the housing market out of a steep slump.

Mexican food chain Chilango has bucked the downturn, launching its first restaurant in Islington, north London, in 2007 amid the eruption of the global financial crisis. It opened a second outlet on Fleet Street last October.

'My gut feeling is that the recession's not going to get worse than where we are now - it may stay at the point we are at - but it will only get better from this point,' Chilango founder Eric Partaker told AFP.

His experience is in line with recent news suggesting that the British economy could be awaking from its slumber. The country's gross domestic product (GDP) - the total value of goods and services produced in the economy - shrank in the third and fourth quarters of 2008, and contracted a further 1.9 per cent in the first three months of 2009.

But a leading think tank has predicted that the worst is now over for the embattled economy - adding that it grew in size over the past two months. On Thursday, the National Institute of Economic and Social Research (NIESR) said British GDP grew by 0.2 per cent in April, followed by 0.1-per cent expansion in May, as a fragile recovery appeared to take hold.

The cautious air of hope is echoed on the high street, where British retail sales increased 0.9 per cent in April from March.

In further encouraging news this week, British manufactured output rose by 0.2 per cent in April from March, marking the second monthly gain in a row, official data showed.

The positive data is reflected on the factory floor: Rex Baynton, managing director of Stephens Gaskets in Oldbury in England's West Midlands region, said recent weeks had brought welcome relief.

'Things have changed quite remarkably, positively, just in the last two weeks really. Clearly our customers, who are the end assemblers, their demand is clearly growing,' he told the BBC. -- AFP