By Max Clarke
The IMF has praised the UK’s diverse recovery programme, though warns that considerable hardship remains in store for UK households as inflation and reduced disposable incomes appear set to stay.
A broad attempt by the Coalition government to focus on increasing and diversifying exports, as well as moving away from economic dependence on public and private sector consumption, was heralded as a necessary means of achieving broad and robust growth.
Echoing the CBI’s forecast, the IMF predict GDP growth will remain sluggish at 1.5% for the remainder of the year before rising to a moderate 2.3% in 2012. This compares to the loss in 2009 of a staggering 4.9%.
Chief reasons for this is again the loss of disposable incomes. Soaring utilities prices, high inflation, and jobs uncertainty, are reducing the ability of UK households to spend by some £35bn- greatly reducing demand from UK retailers and industry. The result has been an overall drop in consumption. For this reason, diversifying the economy to focus more on an export-led recovery is seen as the most viable path to recovery.
The government has recognised this, introducing the export- enterprise finance guarantee scheme providing reduced rate loans to firms interested in boosting their overseas orders. Legendary creators of bespoke motorcycles- Norton, yesterday received the first such loan.
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