Whilst some of us were hoping to have seen the end of the doom and gloom that has been dogging us for the last few years, it will be at least another three years before the British high street starts to recover from the recession and even then the prospects of a full recovery before the end of the decade are not looking good.
This depressing piece of news came from Ernst & Young’s ITEM Club, who suggested that although we may be through the worst of the recession, consumer habits and rapidly increasing mortgage costs could pile further pressure on the already beleaguered economy.
Economists expect the Bank of England base rate will have increased to between 4% and 5% within the next three years. Consumers are concentrating on paying off their debts rather than spending and although spending will probably stabilise at around 2.3% a year between now and 2020, this is well short of the 3.8% seen before the recession.
The ITEM Club also pointed out that consumer spending will only increase if inflation continues to slow and oil prices cool.
Andrew Tyrie, the chairman of the Treasury Select Committee said everybody, government included, was concentrating on rebuilding savings and paying off debts. The country has not yet adjusted to the aftermath of the boom and bust era and until it does, we can expect a further period of low growth.
Nick Clegg recently suggested that the government might increase spending to support demand and pull on its credibility to inject money into the UK economy.
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