The UK economy is "fundamentally sound", according to a new report, despite pressure on manufacturing and signs that retail activity is slowing. "Despite all the doom and gloom, the UK economy is fundamentally sound, and we will see GDP growth picking up later this year to over 2pc and accelerating into 2004/5," the Ernst & Young ITEM Club said in its latest quarterly forecasts The group, which uses the same model as the UK Treasury for measuring economic growth, also said it expects modest house price growth in 2003, boosted by possible rate cuts towards the end of the year
The report added that that the market correction has hit consumers' pockets and that the threat of redundancy, a pension crisis and depressed equity markets are providing "little comfort and even less income" "Recent news from the High Street may be gloomy, the Chancellor may be about to raise taxes in April, and the uncertainty surrounding the Middle East remains a cause of concern," it said. "However none of this should obscure the fact that the UK has had a decade of uninterrupted economic growth and now has in place permanently low inflation and low interest rates". //www.fxcentre.com