Ashcroft downbeat on GDP growth
JOHN Ashcroft, economist and chief executive of pro.manchester, believes the recovery is “moving off track” and the economy will grow by just 1.1% this year.
Writing in his third quarter economics review Ashcroft’s growth estimate is lower than the consensus forecasts of 1.3% by his peers.
He believes there is “no prospect” that interest rates will go up by the end of the year, and even then a rise of just 0.25% – 25 basis points – “may well be the cap”.
Reiterating his previous belief that hopes that the manufacturing sector can drive a turnaround in the economy are unrealistic, he says: “The march of the makers, rebuilding the workshop of the world to finance the big society is slowing as domestic demand falters.
“The service sector is struggling to pick up the pre-recession pace, the trade figures continue to disappoint and the trade deficit will continue to expand.”
Ashcroft, who also predicts that inflation will remain high – over 4% by the end of the year, says the economic recovery is weaker than seen in previous cycles in 1980 and 1990.
Continuing his downbeat tone, he sees little respite to increasing world commodity prices, noting that UK manufacturing input costs rose 17% in the second quarter of 2011 after a 15% hike in Q1.
He believes an oil price of $100 a barrel is “becoming the norm’ – which will continue to add to inflationary pressures.
