The Ernst & Young ITEM Club - Ernst & Young - United Kingdom

ITEM Club Winter 2011-12 forecast

No double dip but, with luck, a precarious recovery starting later this year

In its Winter 3-year forecast, the ITEM Club says that global uncertainty, and in particular the ongoing crisis in the Eurozone, has put the UK economy on hold. ITEM believes the UK is currently in a technical recession, and even if the Eurozone crisis is resolved promptly, it doesn't foresee the UK starting to recover until the autumn, when CPI inflation falls back to the 2% target. But unemployment will then be heading towards a peak of 3 million next year, hampering a recovery in consumer spending. In this precarious economic environment, ITEM says the only hope is that UK companies can boost sales to the new fast-growing economies – but they must also ensure they can deal with the inevitable shocks, as well as adapt to new situations and opportunities.

For more detail, read our summary of the ITEM Club’s forecast or download a print-friendly pdf:

• Forecast headlines and projections
• Background: uncertainty puts the UK on hold
• The forecast: exports are the UK’s only hope
• Risks and implications

The full ITEM Club forecast is available to many of our clients on the Ernst & Young Client Portal.

	Watch Peter Spencer, Chief Economic Adviser to The ITEM Club, outlining the forecast
	Read our press release

We expect to publish the ITEM Club's Spring forecast for the UK economy on this page on Monday 16 April 2012. To receive an e-mail when ITEM reports are published, register here.

Other recent reports

ITEM Club Autumn Statement preview

Additional 100,000 public sector job losses in the pipeline, says ITEM Club report

The UK’s labour market is set to receive another blow, according to a report by the ITEM Club, with an additional 100,000 public sector job cuts expected to be forecast by the Office for Budget Responsibility.

Read ITEM's Autumn statement preview 2.5Mb, November 2011

Listen to our podcast: Ernst & Young partners, together with the ITEM Club, review the Chancellor's Autumn Statement.

Also read our press release.

ITEM Club Outlook for inflation

Brief respite for UK consumers next year, before inflationary headwinds bite once again, says ITEM Club report

Forecasts show that 2012 will be a better year for UK consumers, with inflation having peaked and expected to dip below 2% in the next 12 months. However, according to a special report by the Ernst & Young ITEM Club, the respite will be short lived. Once the recovery has taken hold, there is a strong chance that inflation will pick up again, eroding real wages.

Read the ITEM Club’s full report on inflation  (198K November 2011), and our summary (3Mb November 2011)
Also read our press release.

ITEM Club Outlook for Financial Services

ITEM predicts lacklustre growth for financial services

With the Eurozone in crisis and the world economy faltering, near-term the outlook for the UK economy – and by extension the UK financial sector – has worsened, says ITEM. Its latest forecast predicts that low growth – 0.9% this year and 1.5% next year – will further limit the supply of credit to the wider economy, impact employment, increase loan write-downs by £3bn and reduce lending, which in turn will hamper the UK's recovery.

For more detail, download the full report 1.5Mb, October 2011

Read our press release.

ITEM Club Outlook for UK Consumer Spending

We expect a slow uneven recovery; the value conscious consumer is here to stay
The UK will not experience a consumer spending led recovery. Our latest research with the ITEM Club shows that expectations of a significant upturn in 2012 are premature. This is mainly due to real disposable income continuing to fall well into 2012, and it will be 2013 before consumer spending reaches pre-recession levels. The long term outlook is also of concern, as growth in consumer spending over the next decade is forecast to be subdued in comparison to the decade preceding the global financial crisis.

Read the ITEM Club's full report on The Outlook for UK Consumer Products (484K May 2011)
Also read our press release.