July 20, 2009 - 5:43am
According to Ernst & Young ITEM Club summer forecast, UK gross domestic product is likely to decrease by 4.5 percent this year, the largest decline since 1945. A "subdued recovery" of half a percentage point is likely to follow for the UK economy next year, but a sustainable improvement will only be attained when world trade starts to pick up.
Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club, wrote that GDP could fall by as much as an additional 3 % this year and another 1.7 % in 2010, if the worse case scenarios of the threat of swine flu are fully realized.
However, overall the short-term outlook for the UK economy is still a gloomy one, because credit remains constrained and the current lack of competition among banks means lending will continue to remain expensive and restricted.
Furthermore, the forecast showed that interest rates will be kept at 0.5 % well into next year and consumer spending is likely to weaken further over the second half of this year.
Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club, wrote that GDP could fall by as much as an additional 3 % this year and another 1.7 % in 2010, if the worse case scenarios of the threat of swine flu are fully realized.
However, overall the short-term outlook for the UK economy is still a gloomy one, because credit remains constrained and the current lack of competition among banks means lending will continue to remain expensive and restricted.
Furthermore, the forecast showed that interest rates will be kept at 0.5 % well into next year and consumer spending is likely to weaken further over the second half of this year.