Olympic Blvd, Los Angeles -- (SBWIRE) -- 04/09/2012 -- Britain is once again suffering a recession and unemployment risks coming close into three million this year as forecasted by the leading economic forecaster. The UK’s economic recovery is ‘paralyzed’ by Europe’s debt crisis, the Ernst & Young Item club will warn, as it cut its GDP growth forecast from 1.5 per cent to 0.2 per cent. According to Eldridge Financial Blog, the dire prediction comes after nine European countries including France, have had their credit ratings downgraded on Friday, dropping world stock markets into turmoil.
Economists had hoped that exports and business investment would strengthen the economy this year, with public and consumerspending still in the doldrums. Nevertheless, Europe accounts for more than 40 percent of British trade and business confidence has been roughly hit by insecurity about the future of the Continent and the single currency. On Eldridge Financial Blog in the Sunday Telegraph quoted Professor Peter Spencer, chief economist at the Item Club, as saying: ‘Figures for the last quarter of 2011 and the first quarter of this year are likely to show that we are back in recession, and we are going to have to wait until summer before there are signs of improvement. Although he said the double dip was unlikely to be prolonged, he warned that unemployment was nevertheless likely to hit three million by early next year. Figures set for release on Wednesday are expected to show the jobless figures continued to rise in the three months up until the end of November. Professor Spencer admitted that the Item Club’s predictions were based on positive assumptions about European policymakers’ ability to keep the euro zone from falling apart. The longer the uncertainty continues, the more debilitating the impact will be on the UK’s economic prospects, he added. The European Commission vice-president for economic affairs, Olli Rehn, yesterday attacked the decision by Standard & Poor’s to cut down the credit ratings of so many European countries.
The downgrades were ‘inconsistent’, claiming that the euro zone was taking ‘decisive action’ over the economic crisis.
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