A leading economic forecaster is set to warn that the UK faces a decade of pain after a massive debt binge.
In a report out today the Ernst & Young ITEM Club, which bases its forecasts on official Treasury models, predicts that growth will struggle to reach one percent in a “challenging year”.
Chief economic adviser Peter Spencer said: “We are no longer in a position to borrow — the massive debts that we racked up in the last decade now need to be repaid.”
Official figures due later this month should confirm a pull out of recession in the final three months of 2009 but ITEM put this down to emergency measures such as the car scrappage scheme.
“Once the effects of these temporary stimuli have worn off, it is difficult to see where the growth is going to come from in the short-term,” Mr Spencer continued.
ITEM said the country had to boost exports over the long-term to avoid the risk of economic stagnation. “It is vital the UK rejuvenates its overseas investment model and starts selling into countries such as China, where we have an exceptionally low market share compared to our leading competitors,” he added.