In its quarterly economic outlook, the ITEM club said it expected GDP growth to rise to 2% later in the year, with continued acceleration into 2004/2005.
Professor Spencer, economic adviser to the ITEM club, said adjustments made to financial markets and corporate boardrooms following the ‘euphoria’ in the run up to the millennium had left the economy in much better shape in the long term, but said the cost to household incomes and balance sheets has been enormous.
The report also highlighted an improvement in disposable income for companies due to increased productivity, and forecast a revival in business spending.
Exports from the UK and business investment into the country are also expected to pick up in 2003.
The outlook was not so rosy for personal incomes with the threat of redundancy, the pensions crisis and depressed equity markets hanging over the heads of most workers.
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