We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message
RSS FeedRisk

Only UK plc can help economy out of recession

EY ITEM Club's latest quarterly update says UK may recover sooner than expected

Article comments

The UK economy will only return to sustainable growth when UK plc begins to invest again, according to the latest quarterly economic research published on Monday.

The Ernst & Young ITEM Club’s latest quarterly report said however that recovery may come sooner than expected with the economy returning to growth over the next six months beginning with an ‘Indian summer’.

EY recently found big business had stored up around £754 billion worth of cash on their balance sheets equating to "a staggering" 50 percent of GDP.

As long as commodity prices remain subdued inflation should fall to 1.7 percent by the end of the year giving cash-strapped shoppers extra spending money, EY said.

“The prospect of a durable UK recovery remains heavily dependent upon confidence in financial and business communities and it’s is going to take time to re-build,” Peter Spencer, chief economic advisor to the ITEM Club, said.

The report said it won’t be consumer spending that hauls the UK out of its second recession in four years but exports and business investment.

“The squeeze is almost over”, Spencer said, but added that “longer term, consumers are going to be more focussed on reducing their debt burden rather than splashing the cash”.

The report said that with the euro zone debacle looking more settled and an improving outlook for world trade, business confidence was expected to translate into investment.

“A resolution of uncertainty about the euro could transform the outlook, pushing company spending up much faster than forecast,” Spencer added.

George Osborne’s decision to postpone the increase in fuel duty coupled with falling energy and commodity prices and tax changes will boost the economy, the report found.

But it also warned that unemployment continued to rise and that the private sector would find it difficult to create jobs at its current rate to compensate for the losses in the public sector.

“With the size of the workforce continuing to increase, the unemployment rate is likely to nudge up,” added Spencer.


Recommended Articles


Only UK plc can help economy out of recession

How Nokia helped and hindered Microsoft's earnings

How Nokia helped and hindered Microsoft's earnings

The Nokia Devices and Services business helped boost Microsoft's revenue, but hurt profitsmore ..

Fraudsters get younger as tech savvy youth fund extravagant lifestyles

“Youth doesn’t always equal innocence” says KPMG fraud expertmore ..

UK profit warnings hit a three-year high

Rising competition, pricing pressures and the pound’s rise were to blame for reducing corporate profits, EY saidmore ..

SEC drops probe into Facebook's pre-IPO sales disclosures

The agency told Facebook that no enforcement action will be taken, the company said in a filingmore ..

Can shaky cyber security scupper an M&A deal?

In M&A a cyber attack on a target company could have a material impact on its valuemore ..

Why CFOs are changing their thinking on sustainability

Pernod Ricard CFO Gilles Bogaert has nailed his 'green' colours to the mastmore ..

Send to a friend

Email this article to a friend or colleague:

PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.

In Depth
Can finance rise to the challenge of major transformation?

Can finance rise to the challenge of major transformation?

Outdated finance processes, systems and competencies leave too many questions unanswered more ..

In Depth
Interim CFO or consultant? The pros and cons

Interim CFO or consultant? The pros and cons

Ed Harding offers an insight into the life of an interim CFO and the advantages in driving transformation more ..


* *