World’s woes drag down UK growth

UK growth is set to disappoint this year as the world’s economic woes create deep uncertainty for future business investment, according to the latest Ernst & Young ITEM Club forecast, which was launched today.

The forecast said growth in the UK economy will remain sub-par, as growing global concerns and the European sovereign debt crisis increase uncertainty among the business and investment community.

It added that while world trade has now surpassed 2008 peaks and UK exports are back to pre-recessionary levels, boosted by the devalued pound, the lack of a resolution to the sovereign debt crisis has caused many businesses to hold back investment.

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Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club, said: “The UK economy has hit a critical juncture.

“The risks to the world economy and the Eurozone are plain to see, starting with the Greek default which hangs like the sword of Damocles over Europe, threatening a domino effect on Portugal and Ireland, followed perhaps by Spain and Italy,” added Mr Spencer.

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