Prospects of UK economic growth “dismal” in 2010

| April 19, 2010 | 0 Comments
Prospects of UK economic growth

Respected economic forecaster, Ernst & Young ITEM Club, sees the prospects for the UK’s economic recovery remaining poor this year, with output growth likely to be about 1%.

In its latest “Outlook for Business” report, the firm’s analysts describe world output and trade as “recovering rapidly” and maintain their view that exports and other sources of overseas income will lead the UK economy out of recession, as US and Asian markets continue to strengthen.

However, ITEM Club chief economic adviser, Peter Spencer, warns “an export-led recovery is really a growth story for the UK from 2011 onwards, not for this year”.

He adds: “The immediate prospects for the economy remain dismal and we still think that the UK will struggle to achieve 1% growth this year.”

Ernst & Young uses the same forecasting model as the Treasury and the report challenges various Government assumptions regarding a bounce back in home markets “with consumers marching back onto the high street”.

The study describes UK households as “weighed down by debt and under pressure in the labour market”, and Mr Spencer comments “we remain concerned that the Treasury’s forecast lacks precision”.

He suggests: “UK Plc could provide a welcome fillip to the economy if corporate treasurers were to release some of the cash they have been holding onto during the recession”.

Finally, Ernst & Young expects Britain’s GDP to grow by 2.7% next year and 3.4% in 2012, “powered initially by exports and then investment”.

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