Item Club Say UK Economy To Stall Until 2013

16 April 2012 16:30 - Mark Maffia


Item Club Say UK Economy To Stall Until 2013

According to a forecast from the Ernst and Young ITEM Club, the UK economy has avoided a double-dip recession but is likely to stall for the rest of 2012. The think tank say that emergency monetary policy action from the Bank of England, the European Central Bank and the US Federal Reserve has allowed to country to put off returning to another recession by stabilising financial markets and improving confidence. However, they expect that the UK economy will only grow a disappointing 0.4% in 2012, before improving to 1.5% in 2013 and to 2.6% in 2014. This 0.4% is just half the pace predicted by the Office for Budget Responsibility.

Peter Spencer, ITEM Club chief economic adviser said, “The UK has so far avoided the dreaded double-dip, but a lot still hangs in the balance.” He warned that the recovery would suffer until the funds are put back into the economy adding, “Business investment has picked up nicely in the US but UK companies remain extremely risk averse, which is sapping strength from the economy. Until these companies stop stashing the cash and start increasing levels of investment and dividends, the economy will remain on the critical list.”

ITEM also warned that household budgets would remain under pressure while firms struggled to create the jobs to offset losses in the public sector. Unemployment is expected to hit 9.3% by mid 2013, with nearly 3 million people put of work.


Related Links :
Ernst & Young ITEM Club - News Release
Office for Budget Responsibility - Economic and Fiscal Outlook
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