Finance News

ITEM Club Report Claims Growth Possible for Remaining Year

After the news that the economy had remained in recession for another quarter, there was a definite air of doom and gloom surrounding most financial predictions. Now, however, a respected economic forecaster has said that the rest of the year could see a period of growth for the UK.
One of the reasons it lists is the drop in inflation, which is occurring at a faster rate than many had expected. This means that consumers will see their spending power increase, allowing them to give a much-needed cash injection into various sectors of the economy. The Olympics are also predicted to help out with the economic situation, and the lack of bank holidays in the second half of the year, combined with Christmas spending in November and December, should see spending rise overall.
Although this is all good news, the ITEM Club are keen to stress that this does not mean the recovery will continue into next year: ‘The prospect of a durable recovery remains elusive, dependent upon confidence in financial and business communities, which is likely to take time to rebuild.’
A further issue is that the growth they expect in the latter half of the year is likely to just cancel out the shrinking that took place in the first two quarters, meaning that the economy will remain flat overall through 2012. Consumers may not end up spending as much either, as many will see an increase in spending power as a chance to pay off the debts they have taken upon themselves in recent years.
As ever, the Eurozone crisis is another key issue. Without resolution, true economic recovery seems like a distant hope. On the flipside of that, we could easily see economic growth occur sooner than many predict as exports and business spending ramp up once again if the situation clears up sooner than expected.