It’s official – UK in recession, E&Y reports
Corporations have to prepare for bleak times ahead, according to the latest E &Y ITEM economic autumn forecast
Corporations and businesses have to brace themselves against the prospect of
a contracting economy over the next three quarters, according to an
Ernst
& Young (E&Y) ITEM Club autumn forecast released today, which repots
the UK economy is now in recession, following dramatic deterioration in the last
quarter.
The ITEM report forecasts the economy will not bottom out before the second
half of next year and expects only a weak recovery in 2010. It predicts the GDP
is likely to drop by 1% next year – the first year of negative growth since 1992
and growth is forecast by only 1% in 2010.
‘We now have to face up to the reality of an economy that has been seriously
weakened by recent dramatic events,’ Peter Spencer, Ernst & Young ITEM Club
chief economist, says. ‘The effects of the credit crisis are spreading out from
the financial and housing sectors and impacting every part of our domestic
economy.’
ITEM warns the supply of credit is likely to remain severely restricted and
corporate profitability will continue to suffer, triggering widespread
reductions in investment and employment. Business investment is already
subsiding and ITEM expects it to fall back by 5% next year.