Double-dip recession claims ‘exaggerated’
UK economic recovery likely to slow over winter, says ITEM
The latest quarterly report by the Ernst and Young ITEM Club predicted that gross domestic product (GDP) will grow by 1.4% this year and 2.2% in 2011, but that the speed of recovery would decrease.
In its autumn forecast, the ITEM Club stated that the UK economy has recovered well from the recession and should avoid a double dip despite the obvious tensions within the economy. However, after a surprisingly strong first half of the year, the UK is heading for a “soft patch” over the winter as the recovery loses momentum.
Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club, said: “The economy is likely to slow over the winter following a surprisingly positive first half of the year, but I think this will be a soft-patch, not a double-dip.
“Helping the UK out of recession has been a bit like peeling back an onion – removing one-by-one the risks to the economy in order to re-build business confidence.”
According to the report, the consumer price index (CPI) inflation will move below target from January 2012 as the VAT increase finally drops out of annual calculation.
There has been widespread concern and uncertainty in the private sector over where the chancellor, George Osborne, will make cuts, which, according to ITEM, is likely to continue until 2011.
“Wednesday’s announcement should peel away another layer of uncertainty from the economic outlook and encourage businesses to loosen the purse strings, in much the same way that the formation of the coalition government and the June budget did earlier this year,” Spencer added.
© Crimson Business. Ltd. 2010