Depressing forecast for UK economy

The CEBR – Centre for Economics and Business Research, expects a shrink in the UK economy by almost 2.9% in the year 2009, which is more than any time ever since the 40s.

It also predicts a decline in the consumer spending and a slump in all forms of business investment. The forecasters also predict that the exporters will be helped by the fall in the pound’s value, however, their projection shall be held back by a global slowdown.

Strategic Business

According to the CEBR’s research, the economy will contract by its biggest amount after the year 1946 where in the country was in the clutches of mass demobilisation after the wars. They also added that the economy is going through an agonizing readjustment as the consumers cut down on the spending because of ever increasing unemployment.

However, the biggest threat according to them would be a predicted collapse in the business sector investment of approximately 15% as the firms will have to struggle to get finances. A range of analysts have made a predicted fall of 2.5% in the GDP next year and the CEBR managing economist confirmed that things could get even worse. He also added that if the business investments were cut at the same time as consumers reigned in their spending then there shall be a contraction between 5% and 10%. This could effortlessly set the UK economy back by five years.

Previously this week, the official statistics confirmed that the UK economy is descending towards the recession faster than it actually appears. All the revised data concluded that there was a 0.6% decrease in the output from July to September which is worst ever since the 1990s. It is also bigger than the 0.5% fall estimated by the ONS (Office for National Statistics).

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