The Item Club’s latest forecast is that the UK may already have slipped back into recession. The think tank has said that the UK’s GDP shrank in the final quarter of last year and is very likely to contract again during the first three months of this year.
Even if the eurozone could resolve its problems, the UK economy would likely grow by just 0.2% this year, it said. A gloomy forecast for unemployment was also highlighted, suggesting that the figure would rise by some 300,000 to just below three million.
The Item Club predominantly blames the eurozone crisis for the UK’s negative outlook and Europe is responsible for close to 70% of the UK’s exports and because the eurozone crisis was unlikely to ease any time soon, the outlook remains bleak until 2014.