Economy is expected to grow in 2010

The economy is expected to grow this year, according to a consensus of forecasts from 40 or so City institutions collated by the Treasury.

The median or midpoint figure of forecasts is for growth of 1.2% in gross domestic product (GDP); the range of forecasts is from growth of 2.2% down to 0.7%.

The Treasury’s own forecast by chancellor Alistair Darling given in last December’s Pre-Budget Report is for growth of between 1% and 1.5%.

Forecasts for next year show further recovery. The median rise in the economy is expected to be 2.1%, but the range is from growth of 3.4% down to 0.5%. The Treasury expects growth in 2011 to be between 3.25% and 3.75%.

Inflation

Price inflation, as measured by the Retail Prices Index (RPI), is forecast to be 3.2% (median figure) by the final quarter of 2010, according to the summary of forecasts. The range is from a rise of 1.8% up to a rise of 4.8%.

For the end of 2011 the range is from 1.5% up to 4.3% and the median is a 1.5% rise.

Earnings Average earnings are forecast to show annual growth of 2.4% over this year, according to the summary of forecasts. The range runs from 4.3% down to 1.1% growth.

In 2011, the range runs from 4.1% growth down to no growth, while the median figure is 2.8% growth.

www.hm-treasury.gov.uk/d/201002forecomp.pdf