How long will it take GDP to regain lost ground since 2008?
Unfortunately, Bank of England (and other forecasts) have often proved to be overly optimistic in the past few years and forecasts have later been downgraded. Will this happen in 2013?
Reasons to be Optimistic
- Housing markets showing signs of recovery
- Some growth in consumer spending and service sector
- Unemployment stayed lower than might have been expected
- Possibility GDP statistics underestimating output.
- Bank lending costs falling.
- The recession has to end sometime.
- There's potential for growth in labour productivity in coming years
- Hopes Eurocrisis is past its worse.
Reasons to be Pessimistic
- Eurocrisis not really over. Falling bond yields doesn't alter the fact Europe in painful deflationary recession.
- Eurocrisis and global slowdown will hit UK economy
- Forecast of cost-push inflation in 2013 will keep squeeze on living standards.
- No let up in government austerity as they miss budget deficit targets
- Quantitative easing hasn't really worked.
- Consumer confidence at all time low
- Labour productivity growth has been negative in past few years.
Well, however, economy fares in 2013, I hope your own year proves to be better!
More at UK economy in 2013
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