UK economy at a crossroads

Ernst and Young recommended a cut in interest rates in today's report

The UK economy is stood still at an economic crossroads and needs new emphasis and growth measures to get it moving again, a new report by independent forecaster Ernst and Young has revealed.

Ernst and Young, who use a similar economy growth forecasting method to the government, has downgraded its forecast for GDP again, with now just a 0.9% growth expected for the year, below 1.4% predicted only 3 months ago. Predictions for 2012 are for a 1.5% growth, down on 2.2%.

The unreliable and volatile nature of the European markets, together with a slowing world economy, is undermining business confidence across the UK and slowing growth, the report stated.

Ernst and Young also stated that new quantitative easing methods are also unlikely to boost the economy significantly.

It recommended targeted fiscal measures together with a cut in interest rates to 0.25% as further ways to try and get the economy moving from the current standstill.

This came as the findings of another survey on Monday morning were revealed, indicating that 23% more companies were reporting critical financial issues in Q3 of this year, when compared to the same period in 2010.

Critical problems included county court judgements (CCJs) for more than £5,000, and/or winding-up petitions being issued.