16.07.12
‘Squeeze almost over’ for UK economy – Item Club
TheUKeconomy could soon return to growth, a new report has suggested.
The Ernst & Young Item Club’s latest quarterly forecast reports that inflation rate is set to fall to 1.7% by the end of the year with overall growth remaining flat for the remainder of 2012.
However, the economy is forecast to grow by 1.6% in 2013 and 2.6% in 2014. Business spending is also forecast to grow by 3.4% in 2012.
Peter Spencer, chief economic adviser to the Item Club, said: “Spiralling inflation has cut real wages by 7.5% over the last four years, but the squeeze is almost over.
“Inflation is now coming back to heel, helped by the chancellor's decision to postpone the increase in fuel duty, falling energy and commodity prices, plus tax changes dropping out of the calculation.
“The prospect of a durableUKrecovery remains heavily dependent upon confidence in financial and business communities, and it is going to take time to re-build. However, a resolution of uncertainty about the euro could transform the outlook, pushing company spending up much faster than forecast.”
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