Ernst & Young’s economic forecasting group ITEM Club has issued a report setting the UK economy’s 2011 growth rate at just 0.9%, down from the 1.4% predicted just three months ago. Next year’s growth statistics also make for grim reading: the 2012 forecasts have been slashed by almost half, from 2.2% to 1.5%. The group also predicts unemployment will hit 2.7 million by the Spring of 2013.
These gloomy pronouncements follow the dire figures issued by the Office for National Statistics earlier this month, showing a paltry 0.1% growth in the second quarter.
This arrested growth has been attributed to the Euro crisis alongside the general instability in the Eurozone. ‘It’s worse than we thought,’ says Peter Spencer, chief economic adviser to the Ernst & Young Item Club. ‘The bright spots in our forecast three months ago - business investment and exports - have dimmed to a flicker as uncertainty around Greece and the stability of the Eurozone increases.’