UK Economy To Improve This Year

28 May 2012 17:00 - Florence Fullalove

    



UK Economy To Improve This Year

According to a report on consumer spending by the Ernst & Young ITEM Club, the average earner will see their finances bolstered by an addition £482 in 2012 and £624 in 2013. The ITEM Club said that so long as oil prices continue to ease, inflation is likely to move back towards the Government’s 2% target by the end of this year, from its current level of 4%, bringing prices into line with wages. Senior economic adviser to the Ernst & Young ITEM Club, Andrew Goodwin, said, “"After the tightest squeeze on consumer incomes in a generation, the worst is now behind us and most people should start to feel a bit better off by the end of the year."

The ITEM Club also said wage growth will finally begin to outpace inflation, while pay packets will also be boosted by the tax changes announced in the Budget. However, despite spending growth forecast at 0.8% this year and 1.1% in 2013, the ITEM Club warned that high streets will still see a slower recovery as consumers pay down debt. Mr Goodwin added, "It's an improving outlook for the UK high street but it's going to be a slow and steady recovery. Rather than splashing their cash, we're expecting to see conscientious consumers keeping a relatively firm grip on their purse strings."  The ITEM Club did say that major risks remain as Mr Goodwin said, "We still need to keep our fingers tightly crossed. The Eurozone crisis continues to cast a long shadow and consumer confidence could easily take another hit if the situation worsens, particularly if unemployment nudges up."We are optimistic, but conditions on the high street will remain fairly fragile until a more sustainable recovery takes hold."

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Related Links :
The Ernst & Young ITEM Club - Special Report on consumer spending May 2012
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