Commentators revise growth down and point to growing north south divide

17th October 2011

The weekend saw the Ernst & Young Item warn that a failure to resolve the eurozone crisis could lead to unemployment of more than three million.

The Telegraph reports on that the Item club will see growth of 0.9 per cent this year. It also believes that the second round of quantitative easing is not enough and wants interest rates cut to 0.25 per cent.

It quotes Peter Spencer, the chief economic advisor to the Ernst & Young ITEM Club, saying: "It's worse than we thought. The bright spots in our forecast three months ago – business investment and exports – have dimmed to a flicker as uncertainty around Greece and the stability of the eurozone increases.

"With the UK recovery grinding to a halt, new measures are now needed to help stimulate growth. We think there is scope for targeted tax relief and spending measures to help put us back on track."

The Guardian reports that the Centre for Economics and Research has revised down its forecast for growth to 0.6 per cent and 0.7 next year. However it also warns that the government having set so much store by deficit reduction has little ability to change course without being punished by markets. It believes we will see additional quantitative easing.

The Guardian also reports on the growing North South divide with accountants Begbies Traynor saying the London and South-east businesses are proving relatively resistant. The number of businesses facing financial distress fell by six per cent in London, three per cent in the South east, while the figure rose to 19 per cent in the North-east, 12 per cent in the North-west and 10 per cent in the Midlands, Wales and the South-west.

Chairman Ric Traynor told the paper: "Many of the regions worst affected such as the north-east and north of England are heavily dependent on the public sector, so it is telling they these areas are witnessing increased levels of financial distress."

More from Mindful Money:

Will the UK, China or even sovereign wealth funds help bail out the eurozone?

Capitalism in crisis: Time to turn to new ideologies?

Is modern corporate capitalism hostile to genius?

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