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Economy will shrink in 2012, says ICAEW

The Institute of Chartered Accountants (ICAEW) has said the economy will shrink in 2012 in its latest economic forecast.

Predictions say that GDP will fall by 0.5%, while growth will be minimal with an increase of 0.9%.

Although unemployment fell in the last quarter according to the Office of National Statistics figures, ICAEW has said there would be no jobs growth for the rest of 2012, and employment will only grow by 0.4% next year.

Investment in businesses will fall by 0.9% next year according to the organisation, which contradicts the business investment growth forecast of 6.4% from the Office for Budget Responsibility.

Wages in 2012 will experience 1.9% increases, which will drop slightly next year to 1.8%.

The ICAEW executive director of members and operations, Robin Fieth, said: “In this low growth economic environment, we are seeing businesses adapting to a new normality.

“As businesses are not confident about the future, they are reluctant to invest, reluctant to increase pay and are more cautious in their future aspirations.

“There needs to be greater urgency about the Government’s growth agenda, a greater determination to implement reforms more quickly and a real emphasis on why the UK is now such a great place to do business.”

This was posted in Bdaily's Members' News section by Miranda Dobson .