Economic recovery in UK 'on hold'

The UK economy is set to shrink by 4.5% in this year, the biggest fall in a single year since 1945, according to an influential think-tank.

The downbeat forecast is more pessimistic than the consensus view, and considerably worse than the 3.5% fall predicted by the government.

The Ernst & Young Item Club also warned that hopes of economic recovery are "running ahead of reality".

The Item Club also warned of the threat posed to the economy from swine flu.

If doomsday predictions about the extent of the flu outbreak materialise, it forecast a further 3% contraction in GDP this year, on top of the 4.5%.

The flu could also wipe out any growth next year, with a worst case scenario of a further 1.2% contraction.

The Item Club also predicts that UK interest rates will be kept at their current level of 0.5% well into next year.

Read more: http://news.bbc.co.uk/1/hi/business/8157876.stm

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A Business Rate Rise on 1st April is Economic Madness

The government has announced that it will allow a record 5% rise in business rates
to go ahead on April 1st causing widespread anger among business groups, who claim that many companies will not be able to afford the rise in such difficult economic times.

The 5% increase in the rate will be the biggest since the current system was set-up in 1993. The increase in the rate is based on Retail Price Inflation figures from last September, when prices were very high.

However, since last September the UK economy has officially entered recession and unemployment now stands at over 2m. There are fears that the increase in the rate will cause some small businesses to cease trading.

"Labour is dragging local firms down the road to ruin. It is the height of economic madness to be increasing taxes on local firms in the depth of recession," said Caroline Spelman, shadow communities spokeswoman.

Source: www.newbusiness.co.uk

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