Forecasts for the economy

No economic growth in 2012 is the consensus of the forecasts from the 40 or so institutions collated by the Treasury.

The range of recent forecasts for gross domestic product (GDP) runs from just 0.1% growth down to a contraction of 0.5%, the median (midpoint) figure is 0.0%.

The independent fiscal watchdog, the Office for Budget Responsibility, was set up by the coalition government in 2010. It expects growth of 0.8% in 2012 followed by 2.0% growth next year.

Inflation, as measured by the Retail Prices Index (RPI), is expected to be running at 2.3% in the fourth quarter of the year, with the range of forecast running from 3.1% down to 1.4%.

Earnings, on average, look set to continue to lose pace with the cost of living as the median forecast for 2012 is 1.7% growth. At the top end of the range of forecasts with a 2.8% forecast there might some real growth in earnings; the bottom of the range is for just a 0.7% rise.

2013 On the economy, the forecasters are slightly more confident for next year. The median forecast is for 1.1% growth, with a range of 2.9% growth down to 0.3% growth.

RPI inflation is expected to be running at 2.6% in the fourth quarter of 2013, with the range of forecast running from 3.6% down to 1.8%.

Average earnings are expected to rise by 2.2%, with the range of forecasts running from 3.8% down to 1.4%.

www.hm-treasury.gov.uk/d/201208forcomp.pdf