2011 economic forecasts have raised again the spectre of a double-dip recession. The Centre for Economics and Business Research (CEBR) estimates growth this year will slide back to 1.1% – in contrast with the official forecast of 2.1%. Moreover the CEBR considers the chance of a double-dip recession has increased from 10% – 20%.
The National Institute for Economic and Social Research (NIESR) – another economics researcher foretell the UK economy is not expected to recover to pre-recession levels until 2012.
I don’t especially want to be the harbinger of doom, but these two think-tank organisations believe the VAT rise to 20% will add 1.2% to the rate of inflation, whilst also reducing consumers’ disposable income and impacting adversley on growth – including new jobs, see my recent blog post Double Whammy.
CEBR, Chief Executive, Douglas McWilliams observes “It’s a tough background for achieving the reductions in public spending that are absolutely necessary to reduce the deficit”.
There’s some glimmer of hope though with the manufacturing sector seeing better than expected growth (5.6% for the year November 2009 – November 2010)…and exports are performing well whilst the pound remains relatively weak.
Let’s hope these factors prove sufficient to haul the UK out of an economic and employment quagmire.