UK Economy to Stall

Posted on by Watson Buckle Accountants in Bradford

An independent forecasting group has claimed that although the UK has avoided a double-dip recession, the economy is set to stall for the next twelve months.

According to the group, although the Bank of England’s monetary policy measures have boosted confidence, big businesses need to fuel the growth.

The group claim that UK corporates have stockpiled cash on their balance sheets and now need to increase investment; as this chief economic advisor for the group says there is only so much central banks could do.

He added: “The problem is that they can keep us away from disinflation and depression but they can’t really pump any more in than that for fear of inflation.

“Business investment has picked up nicely in the US but UK companies remain extremely risk averse, which is sapping strength from the economy.

“Until these companies stop stashing the cash and start increasing levels of investment and dividends, the economy will remain on the critical list.”

The warning comes after the group forecast “dismal” growth of 0.4% during 2012, rising to 1.5% next year; which differs considerably from the predictions provided by the independent Office for Budget Responsibility, which recently suggested the economy would grow by 0.8% during this year and 2% next year.

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