Hopes that the economy is set to make a full and concerted upturn have been dealt a blow, with a well respected group predicting a drawn out and anaemic recovery.
The Ernst & Young Item Club said that gross domestic product (GDP) statistics are likely to improve in the second half of the year as a result of 'a temporary boost from a series of policy and other dynamic effects.'
"Companies that took emergency action to cut output and stocks as credit dried up this time last year are now rebuilding them.
"The scrappage scheme is taking effect in the car industry, while in the new year the increase in VAT (and the end to the stamp duty holiday) will surely bring forward spending (and housing transactions) into the fourth quarter of the year," it said.
However, any considerable growth is destined to be short-lived, with an upturn in GDP figures struggling to reach just one per cent in 2010. This, in part, will be a result of consumer spending being held back, with limited credit lines and a weak housing sector amplifying the problem.
The club's forecast did report increasing business confidence, a welcome trend that was echoed by BT Business research, which found that 75 per cent of the firms it surveyed expect to see an improvement next year.
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