Luke SkyToddler
22nd Oct 2001, 14:23
This from AOL today ...
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UK will narrowly avoid recession - research
New research says the UK economy will narrowly avoid falling into recession.
The Ernst & Young Item Club quarterly forecast says that despite a raft of bleak economic indicators, the UK economy is holding up.
Professor Peter Spencer, economic adviser to the report, said one of the most important elements was the strength of consumer confidence.
He said it was "a bit perplexing" why the UK shopper was still upbeat in the face of so much downbeat economic news.
But he concludes that sound economic fundamentals, such as a firm housing market and falling interest rates, meant British confidence was still high.
The Item Club forecast, which uses the Treasury's model of the economy, said GDP growth would be 2.2% this year, slowing to 2% next year.
But it called on the Bank of England to hold off cutting interests - currently at 4.5% - and said it should instead "wait and see how the economic situation unfolds".
Prof Spencer concedes consumer confidence and the housing market are likely to weaken but added they would be "far from collapse" and, despite the forecast slowdown in growth, it is predicted to move back up to 2.9% in 2003.
But in an interview in the Sunday Times, Sushil Wadhwani, a member of the Bank of England's monetary policy committee, said rates had to fall further to head off global economic slowdown.
He said: "The evidence we have had since September 11 suggests the global economy was even weaker than we had thought prior to then."
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Cold comfort to those of us already out of work since last month, but nevertheless maybe a sign that things will return to normal sooner than expected ... please God!
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UK will narrowly avoid recession - research
New research says the UK economy will narrowly avoid falling into recession.
The Ernst & Young Item Club quarterly forecast says that despite a raft of bleak economic indicators, the UK economy is holding up.
Professor Peter Spencer, economic adviser to the report, said one of the most important elements was the strength of consumer confidence.
He said it was "a bit perplexing" why the UK shopper was still upbeat in the face of so much downbeat economic news.
But he concludes that sound economic fundamentals, such as a firm housing market and falling interest rates, meant British confidence was still high.
The Item Club forecast, which uses the Treasury's model of the economy, said GDP growth would be 2.2% this year, slowing to 2% next year.
But it called on the Bank of England to hold off cutting interests - currently at 4.5% - and said it should instead "wait and see how the economic situation unfolds".
Prof Spencer concedes consumer confidence and the housing market are likely to weaken but added they would be "far from collapse" and, despite the forecast slowdown in growth, it is predicted to move back up to 2.9% in 2003.
But in an interview in the Sunday Times, Sushil Wadhwani, a member of the Bank of England's monetary policy committee, said rates had to fall further to head off global economic slowdown.
He said: "The evidence we have had since September 11 suggests the global economy was even weaker than we had thought prior to then."
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Cold comfort to those of us already out of work since last month, but nevertheless maybe a sign that things will return to normal sooner than expected ... please God!