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EY Item Club predicts growth to slow next year

Forecasting group EY Item Club is predicting that growth in the UK economy will slow next year as uncertainty over the general election and the eurozone hit investment.

The UK economy will grow by 2.4 per cent in 2015, down from the 3.1 per cent it predicts for this year, the BBC reports.

The forecasts are based on the upcoming general election in May and that persisting concerns over the fate of the eurozone and the conflict in Ukraine will dampen corporate appetite for investment.

EY Item Club chief economic adviser Peter Spencer says the outlook for UK exports “continues to look dreadful”.

He says: “The forecast for GDP growth is still relatively good. What has changed is the global risks surrounding the forecast and the headwinds facing investment by firms.

“The UK’s export outlook continues to look dreadful. The glimpse of economic rebalancing that we saw in the early part of this year has turned out to be a false dawn.

“Looming political uncertainty risks denting corporate confidence – the question now is how will these risks play out? I expect caution to become the order of the day.”

The forecaster also predicted inflation would stay low, averaging 1.3 per cent in 2015, and that the Bank of England would not rush to raise interest rates.



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