The UK's economy is in danger of taking far longer to recover than in 2008, says the Forum of Private Business.
The UK's economy is in danger of taking far longer to recover than in 2008, says the Forum of Private Business (FPB).
FPB economic adviser Phillip Wyman is forecasting another stormy 12 months for small and medium-sized businesses as the economy continues to struggle with the euro debt crisis, plummeting consumer confidence and spiralling unemployment.
GDP growth for 2012 is likely to come in below 1 per cent once figures are in, and predictions for next year range from 1.2 per cent to 0.5 per cent, with the Office for Budgetary Responsibility (OBR) predicting 0.7 per cent as its mid-point forecast.
Says Wyman, ‘This is very weak indeed, and indicates that the economy is more fragile than most commentators realised."
Wyman expects UK unemployment to reach 2.9 million, a figure he says is down to private sector expansion stalling in the face of global uncertainty – but less than the 3 million predicted by other economic commentators.
‘Job losses in the public sector have not been compensated for by a rapid expansion in private sector employment, as predicted by the OBR a year or more ago, and it's not surprising why this has not occurred.'
He adds, ‘Employers base investment and hiring decisions upon expectations for the future, and, with the current weak trading conditions, external factors such as the eurozone crisis, falling consumer expenditure and a continued reluctance for financial institutions to provide inexpensive loans for expansion purposes, these expectations are unlikely to improve in the near future unless something changes.’