Experts have warned that although there may be signs that the double dip recession is over, the lessons which have crippled Britain’s economy in recent years have not been learned.
The influential Ernst & Young ITEM Club have said that although growth is now being recorded, the reliance on credit and spending has not been stamped out.
After the recent economic downturn, which has seen a number of retailers and small businesses struggle to survive, the early shoots of recovery are being clearly seen and a number of leading economists have suggested that the worst of the recession is now over.
However, the ITEM Club have cautioned against over-optimism and have pointed the finger towards the continent, as the reason why the government’s plans are not working out as hoped.
The coalition had been hopeful that the rejuvenation of the British economy would be inspired by the manufacturing sector, as well as exports ,but the much hoped for revival has not materialised. Instead, the tried and tested industries of mortgages, lending and credit, are once again booming.
After three quarters of economic contraction, the UK is expected to pull clear of the recession, but experts have warned it is once again leaning on an unstable foundation.
The chief economist for the ITEM Club, Professor Peter Spencer, said the growth Britain was currently experiencing was the ‘wrong kind,’ but admitted that at least it represented a u-turn of sorts. He warned that until the global economy gets back on its feet and, in particular, the cash-strapped nations in the eurozone, the UK will be forced to rely on mortgages, lending and consumer spending, to generate any kind of expansion.
The official ITEM Club report will echo these views and describe ‘more hopeful consumer trends.’