The UK’s economy will struggle to avoid a recession in 2009, the Ernst & Young ITEM Club said yesterday.
According to the group, GDP growth is forecast at just one per cent, inflation set to remain above the target of one to three per cent, and unemployment set to deteriorate.
“Both on the high street and in the housing market it is going to get a great deal worse before it gets better,” said chief economist of Ernst & Young ITEM Club Peter Spencer.
The current freefall in housing markets is also set to continue.
“Credit markets in the developed financial markets are still showing little sign of loosening and continue to impact on the increased cost and restricted availability of mortgage finance,” the club’s report said.
With consumer spending set to fall sharply, Ernst & Young forecast a rate cut as soon as November.
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