The National Institute of Economic and Social Research think tank predicts that the UK’s economy will increase by 1.3% this year. Great news for umbrella company and limited company contractors you may think?
According to the NIESR, GDP will grow by 1.7% in 2011 followed by an increase of 2.2% the following year. But it warned that we will not see pre-recession consumer spending levels until 2015 at the earliest. So far this year economic growth has been supported by government current and capital spending but this trend cannot continue and George Osborne must keep a keen eye on public finances for the foreseeable future.
The organisation also expects that the impending VAT increase will cause the cost of living inflation to be above the coalition’s target of 2% for the next two years.
However, Adam Marshall from the BCC has expressed concerns that business confidence may impact on the UK’s recovery. He pointed out that a full economic recovery will be dependent on business confidence improving and this means it needs to be easier for companies to hire new staff.
The strongest quarterly financial performance of the year is already behind us if Michael Baxter, the editor of the Investment and Business News magazine, is to be believed. The latest data from the ONS showed that GDP increased by 1.1% in quarter 2 compared to 0.3% in the first quarter of the year.
He pointed out that we have still not felt the effects of June’s emergency budget, but once we do economic growth will start to shrink. He went as far as to say that Q2 of 2010 may be as good as it gets for the remainder of this year and next.
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Image: mixed emotions by Eli Horne
