By Max Clarke
With the UK economy continuing to struggle into the summer months, growth forecasts have been revised down from their previous 1.8% to 1.4%, according to the latest Ernst & Young ITEM club report.
This downturn will persist during 2012 when GDP growth rates will reach 2.2%, but is likely to resume a more robust growth rate of 2.5% by 2013.
EU indecision over the Eurozone's debt crisis has deterred many UK businesses from investing both internally and overseas, contributing to the poor performance.
Persistent inflation and the continued squeeze on household’s disposable incomes were also cited as major barriers to a more accelerated recovery, along with the government’s austerity measures.
The latest challenge to hit the previously healthy manufacturing sector has come in the form of global unrest throughout the Middle East North Africa regions, as well as the fragile economic situation undermining the Eurozone, which have led muted demand for exports.
The ITEM club report, however, suggested that investment remains strong and that tax revenues will pick up after the economy adapts to the government’s cuts and that talks of an economic Plan B are premature.
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