U.K. GDP Will Grow Twice as Much as Forecast, Item Club to Say
Written on October 19, 2009
The U.K. economy will grow twice as fast as previously expected next year as the country pulls out of the worst recession in a generation, Ernst & Young LLP’s Item Club will say tomorrow.
Gross domestic product will increase 1 percent in 2010, compared with a 0.5 percent forecast in July, the researchers, who use the same model as the U.K. Treasury, will say in London. The estimate for 2009 will be lowered to a 4.5 percent contraction from a 4.4 percent drop.
The Bank of England will assess the progress of its 175 billion-pound ($286 billion) program to buy bonds with newly created money as the interest rate-setting panel produces economic forecasts in November. Britain probably escaped recession in the third quarter after five quarters of contraction, a Bloomberg News survey shows.
“The outlook for the next 12 months is certainly looking more positive than the last year but it is going to be a bumpy ride,” Peter Spencer, chief economist at the Item Club and a former Treasury official, will say. “There could still be substantial pain.”
Gross domestic product rose 0.2 percent in the July- September period, the first increase in six quarters, according to the median of 33 forecasts in a Bloomberg News survey. From a year earlier, output dropped 4.6 percent, the survey showed. The Office for National Statistics will release the data on Oct. 23.
Filed in: business.