Gloomy outlook forecast
Oct 20 2008 by Andrew Mernin, The Journal
THE economy is already in recession and will shrink by 1% next year, forecasters have warned.
The Ernst & Young ITEM club, which uses the Treasury’s own model for its prediction, said the credit crunch will hit the UK “very hard” even if recent bank rescues restore calm to the financial system.
House prices will be 14% below their 2007 peak by the end of the year and tumble a further 10% in 2009 before stabilising in 2010, it added.
The gloomy prediction comes as official figures due on Friday are set to show the first quarter of economic contraction since 1992 between June and September.
Unemployment could hit 2.2 million by the end of 2009 as the impact of the slowdown and cost-cutting by employers leads to lengthening dole queues, it said.
