Ernst & Young: UK recession inevitable

by David Masters

Story link: Ernst & Young: UK recession inevitable

Analysts at Ernst & Young believe the UK has already hit recession, and that the economy is likely to go further downhill before it improves.

The UK economy is currently going through its first quarter of negative growth since 1992, with GDP to fall by 1% over the next year.

If this negative growth continues for a second quarter, then the UK will officially be in recession.

Ernst & Young ITEM Club predicts that negative growth will continue until mid-2009, with positive growth not starting until 2010, meaning that the UK is already in recession.

ITEM also expects house prices to continue their downward trend, with a further 10% likely to be wiped off before they pick up again.

On the brighter side, inflation is dropping, which means interest rates could fall to as low as 3% next year.

In 2010 the economy is expected to have a positive growth rate of 1%.