Temporary recession to hit UK this year, says CEBR |
Economists who reckon to have been the most accurate of all the pundits for last year’s forecasts have come up with their predictions for this year. |
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Mike Jones
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Market Press Release – January 9, 2012 7:16 am – The Centre for Economics and Business Research is now anxiously awaiting David Smith’s Golden Guru awards this weekend in the Sunday Times to see if it came top for 2011.
In 2010, the CEBR accurately predicted the potential for a Greek default, and last year forecast that Italy would be unable to repay its debt. It also predicted an economic crisis in Japan (although not the tsunami), was right about house prices (‘little change’) but got it wrong over inflation – higher than expected.
So here are its top ten predictions for 2012:
(1) It now looks as though 2012 will be the year when the euro starts to break up. A 60% probability is forecast. The probability of an eventual break-up within the next decade has been given a 99% chance.
(2) A modest to severe recession in the West, possibly excluding the US but including a temporary recession in the UK. Depending on how the euro is managed, European GDP will decline by between 0.6% and 2%.
(3) The US’s economic star will start to shine, albeit with a mild glow at growth of around 2%.
(4) It is going to be another tough year for UK households, squeezed by reduced income growth, with pay freezes common and firms not hiring.
(5) Inflation to fall sharply. Expect lower commodity prices, affecting especially food and petrol.
(6) European banks to be bailed out. Most of the French and German banking systems will have to be bailed out to compensate for the write-downs on their sovereign debts. They might even be nationalised as well. Many other European banks will go back into crisis.
(7) Cracks start to show in the Asian economic and political success story. CEBR predicts that Chinese growth will slow to a bit over 7% – which for them is a recession – and India to 6%.
(8) For the UK there are two special events – the Queen’s Diamond Jubilee and the Olympics. The CEBR forecasts that the former will be a huge success and the latter a flop. It reckons that people will want to celebrate the reign of a remarkable lady who still carries out her duties uncomplainingly. The nation will take her to their hearts. By contrast, the Olympics will reduce London’s GDP by crowding out visitors who would otherwise have come. It also criticises the effect of the ‘ZIL lanes’ for transporting the IOC officials, which will make London’s traffic a worse hell than normal.
(9) In sport, Manchester United will win the Premiership, and at cricket, England should beat the West Indies easily and the South Africans with a little more difficulty.
For more information, visit: http://www.introducertoday.co.uk/news_features/temporary-recession-to-hit-uk-this-year-says-cebr
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