UK economic condition forecast 2013

World Economic outlook - UK economic condition forecast 2013 : The UK economy could suffer a "groundhog year" in 2013, a left-of-centre thinktank has warned, with little or no growth amounting to a rerun of last year's economic performance, when GDP is thought to have fallen 0.1%.

Other economists have predicted Britain will tumble into an unprecedented triple-dip recession and has a strong chance of being stripped of its prized AAA credit rating.

The Institute for Public Policy Research (IPPR) said consumer and business morale had been dampened by talk of years of austerity and uncertainty over the eurozone crisis.

"It seems that time has stood still for the last 12 months," said Tony Dolphin, IPPR chief economist. "Policymakers appear to have little idea how to boost growth in the economy and are left hoping that the news will get better. The risk is that 2013 could be groundhog year for the UK economy."

He said the government was counting on "something just turning up" to lift the economy. The government's official economic forecaster, the Office for Budget Responsibility, expects the UK economy to grow by 1.2% in 2013. But the IPPR said such growth could only be achieved if consumers started spending more, which would require them to take on more debt. Dolphin said: "This would be a significant change from the trend of the last four years, and is very unlikely."

His gloomy outlook was echoed by the Centre for Economics and Business Research, which said the UK economy had a 50/50 chance of falling into a triple-dip recession next year. The consultancy said household budgets would continue to be squeezed. People would be underemployed rather than unemployed and would suffer another year of falling incomes in real terms, with very slow pay growth failing to keep up with inflation.

The split between the UK and the European Union split could also become "politically serious" this year, said Douglas McWilliams, CEBR chief executive, . "Oddly, rather than the other way round, it could be that the prospect of a UK exit triggers the euro break-up."

A poor economic performance in the UK would put public finances under pressure and raise questions over Britain's ability to pay back its debts, warned economists. Howard Archer, of IHS Global Insight, said he strongly suspected at least one major credit-rating agency would strip the UK of its top rating in 2013. "The loss of the UK's AAA rating would clearly be seen as an embarrassment for the government, given the emphasis it has frequently placed in the past on keeping [it]," he said.

There were fresh calls for the coalition to intervene to stimulate the UK economy. The IPPR said the government should boost demand in the economy, invest further in infrastructure projects, establish a British Investment Bank modelled on the French one, and guarantee everyone who had been out of work for a year a job on the minimum wage in a charity or in local government.

Top of the wish-list for the British Chambers of Commerce was access to finance for growing firms. It welcomed the idea of a British Business Bank but asked for a firm timetable for its creation. "There is an urgent need for a patient business lender to give innovative, new and growing businesses, as well as those businesses in recovery, access to the levels of finance they need to grow and evolve," it said.

The CEBR did predict some bright spots for the world economy in 2013, saying Asia could bounce back a bit after sputtering in 2012. "Since the political succession was sorted out in China they have been pushing the levers in favour of economic growth. Structural and long-term problems remain but these may be overtaken in 2013 by extra demand from China.

"And Japan, with a new aggressive government, is likely to try reflation before anything else," said McWilliams. In China a survey of private factory managers indicated activity in December had reached its fastest pace since May 2011. The HSBC Purchasing Managers Index rose to 51.5, well above November's 50.5 – with a reading above 50 signalling expansion.

Bank of England cuts UK growth forecast for 2013

The Bank of England has cut its growth forecast for next year to about 1% from nearer 2%, and said recovery will be "slow and protracted". It now thinks that the economy will not get back to pre-crisis levels until 2015, two years later than it previously predicted.

Governor Sir Mervyn King also welcomed the latest jobs figures which showed a continued fall in unemployment. He was presenting the Bank's quarterly Inflation Report, which forecast that inflation would not now fall towards the government's 2% target until mid-2013, rather than in the first half of next year as previously thought.

The Bank has previously predicted that inflation might fall towards the government's 2% target in the first half of next year. But it now expects inflation to stay higher for longer. "We face the rather unappealing combination of a subdued recovery, with inflation remaining above target for a while," Sir Mervyn said.

The Bank's report came on the day that the Office for National Statistics said that the UK unemployment rate fell to 7.8% in the July-September quarter, down from 8% in the previous three months.

The 49,000 fall in number of jobless, to 2.51 million, was almost entirely due to a fall in youth unemployment, the ONS said. It means that the jobless total is now 110,000 lower than for the July-September quarter last year.

Figures for 2012 and 2013 are forecasts

 UK inflation forecast 2013, uk gdp growth 2013, National Statistics uk economic data 2012, UK unemployment rate 2013 , Bank predicted that uk inflation 2013. uk economic performance 2013, uk economic recession 2013, uk economy 2013

Related Post: