Think tank revises UK growth forecast

| July 18, 2011 | 0 Comments

Respected think tank, Ernst & Young ITEM Club, has lowered its growth forecast for the UK economy after warning that the UK is at a “critical juncture”.

The ITEM Club now believes the UK economy will expand by 1.4% this year, down from an earlier estimate of 1.8%.

Furthermore, it is predicting growth of 2.2% for the 2012 year, slightly lower than a previous forecast of 2.3%.

According to the think tank, the ongoing debt crisis in the euro zone could create further uncertainty among businesses in the UK, while global financial uncertainty is holding back business investment.

Peter Spencer of the ITEM Club comments: “The risks to the world economy and the Eurozone are plain to see, starting with the Greek default, threatening a domino effect on Portugal and Ireland, followed perhaps by Spain and Italy.”

In related news, last week, the Chartered Institute of Personnel and Development (CIPD) revised its growth forecasts to 1.4% for the 2011 year, down from its previous estimate of 1.6%.

The estimate is roughly in line with other forecasts after the International Monetary Fund recently said the UK economy would grow by 1.5% this year, while the British Chambers of Commerce expects growth of 1.3%.

The Organisation for Economic Cooperation and Development is estimating 1.4% but there is a more optimistic 1.7% from the Office of Budget Responsibility (OBR).

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