"Consumers may be propping up a weak recovery this year but the move towards more balanced growth over the medium term hangs critically upon a recovery in world markets"
- Peter Spencer, Item Club chief economic adviser
The U.K. economy is expected to grow in the second half of 2012, boosted by the increase in consumer spending and a revival of high street sales, the Ernst and Young Item Club's latest report showed on Monday. Despite latest forecast, economy is going to contract by 0.2% over the year as a whole and will miss the £95bn deficit target for this year by approximately £8bn.
"Consumers may be propping up a weak recovery this year but the move towards more balanced growth over the medium term hangs critically upon a recovery in world markets," said Item Club chief economic adviser Peter Spencer.
"However, even if the US negotiates the impending fiscal cliff [tax rises and spending cuts] and European policymakers actually do what it takes to save the single currency, these markets will still be held back by austerity and retrenchment."
The FTSE 100 Index rose 0.21 per cent to 5,805.61. The broader FTSE All-Share Index added 0.20 per cent to 3,031.62.
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