UK is in recession says Item Club economic forecasters

Posted on January 16, 2012

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The UK may have already slipped back into recession, economic forecaster the Item Club has warned.

The think tank said gross domestic product shrank in the final quarter of last year and would contract again in the current three-month period.

It said that even if the eurozone could resolve its problems the UK economy would grow by just 0.2% this year.

It also predicted unemployment would rise by a further 300,000 to just below three million people.

‘Exports’

“We are probably in technical recession,” the Item Club’s chief economic adviser, Peter Spencer, told the BBC.

“Consumption was very badly hit by rising inflation last year, business spending has been paralysed, and of course recruitment has also gone on hold as a result of the euro crisis.

“And unfortunately, turning to exports, Europe takes the lion’s share of our exports.”

The Item Club said the economy would not return to normal levels of growth until 2014 as the eurozone crisis continued to hold back investment in the UK.

Even if a solution was found, Britain’s economy would still only grow by 1.75% in 2013 and 2.8% in 2014, it said.

BBC

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