NIESR Revealed Its 2010 World and the UK Economy Forecast on 29 April

Posted: April 30, 2010 in Uncategorized
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National Institute of Economic and Social Research revealed its 2010 world and UK economy Forecast  at  its regular press conference in Westminster on 29 April.

The conference  started in the management of NIESR’s director Dr Martin Weale  and covered  three titles ,which were explained by  a different  researcher of the Institute, such as ; “Prospect for the World Economy“, “Prospect for the UK Economy”, “Medium Term Prospects for the Public Finances“.

Senior researcher Dawn Holland   explained  “Prospects for the  World Economy”. According to Holland’s  research ,global output regained its pre-crisis peak in the first quarter of 2010.The world economy  will grow by almost 4 per cent in 2010  despite the  polarisation between buoyant emerging economies and hard-hit developed countries especially  in Europe  .NIESR expects the US and Canada to return to previous peak levels of output by the end of this year ,while recover in the UK, Italy, Germany is expected to be delayed until 2012-14.

Researcher Simon Kirby(from left to right),Director of NIESR Dr Martin Weale,Senior researchers Dawn Holland and Ray Barrel revealed 2010 the World and the UK economy forecast at NIESR's press conference in Westminster.

Despite the intense pressure from the US for an early revaluation of the yuan ,China has been a leading the global recovery by  increasing its GDP by 11.9 per cent in the first quarter of 2010 according to Holland’s report.

Stock building  in 2010 is expected to contribute 0.9 percentage points to US growth of 2.9 per cent and 0.5 points to Euro |Area growth of 1.2 per cent further explained Holland.

NIESR expects that labour input to decline in Japan,Finland,Greece while US,Australia and Canada to benefit from hours worked rising by around 1 per cent a year in 2012-16 and annual TFP growth at or close to 1.5 per cent.

If  Greece’s recently increased bond spreads are sustained for five years ,outlook for GDP growth would reduce by about 1 per cent per annum according to report. Weale said,it is too soon to estimate  whether Greece will be suspended from Euro Zone  when he was asked  .

Simon Kriby, a researcher of the Institute, revealed the figures of  UK economy under  the title of “Prospects for the UK Economy.”

According to Kirby’s research ,GDP will grow by 1 per cent in 2010,picking up to 2 and 2.2 % in 2011 and 2012.Unemployment will peak at 2.7 million in 2011.Consumer-price inflation will average 3.1 % in 2010 will fall below 2% in 2011 and 2012.

Ray Barrel, senior researcher, and Simon Kirby set out a baseline projection for the level of borrowing and debt in the UK over the 20 years  to explain “Medium Term Prospects for the Public Finances.”

Barrel and Kirby’s projection indicates that real wages in the public sector will decline by nearly one per cent  over the next five years and in mid 2015 public sector borrowing will be 4.5 per cent of GDP.

By 2020 the direct tax will have to rise by another 1.25 per cent GDP and the government deficit will be below 3 per cent with no further cuts in spending  or increases in taxes according to the projection.

The pair also project that long term interest rates of  5 per cent in 2020 and inflation of 2 per cent mean that bond holder will have a real return of 3 percent and a repayment of principal of 2 per cent.

In 2024-6 state pension ages will rise from 65 to 66 due to increased number of people of pensionable age. Taxes will have to increase half percent of GDP equivalent to 1,5 pence ,to pay for ageing by 2030.

Dr Martin Weale and other three researchers Barrel, Holland and  Kirby  took questions after revealing  the 2010  World and the UK Economy Forecast.


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