The UK economy will continue to struggle in the coming months, according to two separate studies published this week.
Independent forecaster Ernst & Young has altered its prediction for gross domestic product (GDP) to just 0.9% this year, down from the 1.4% it predicted three months ago. The organisation – whose Item Club study uses the same forecasting methods as the Government – has called for the introduction of new measures to spark a recovery.
Said Peter Spencer, chief economic adviser to the Ernst & Young Item Club, to the BBC, "It's worse than we thought. The bright spots in our forecast three months ago – business investment and exports – have dimmed to a flicker as uncertainty around Greece and the stability of the eurozone increases.
"We think there is scope for targeted tax relief and spending measures to help put us back on track," continued Mr Spencer. "In the meantime, businesses need to be much more aware of the economic risks and have contingency plans in place given the current volatility."
Economists at the Centre for Economics and Business Research (CEBR), meanwhile, have predicted further stagnation within the UK economy in 2012. The organisation suggested that the struggling world economy, coupled with the debt crisis in Europe, could have drastic consequences for UK growth.
Said the CEBR report, "A Lehmans-style financial crisis in the eurozone now looks highly likely ... This crisis threatens to severely curb the potential for export demand and business investment to drive the UK economy in the short term – something which is necessary to offset the negative impact of government spending cuts and weak consumer demand following the decade of debt-fuelled spending."