UK growth forecasts weaken but recession not yet on cards

Dramatic stock market movements and disappointing economic data have caused leading economists to downgrade their growth forecasts, but they are still not predicting a recession, the FT reports.

Michael Saunders, an economist at Citigroup, said the firm had begun the year with a growth forecast stronger than many of its peers in the private sector, but now believes a pick-up in business activity and a consequent boost to jobs and demand is unlikely. “Our base is not a recession, but an extended period of sluggish growth and rising unemployment,” Saunders said. Although British companies have cash on their balance sheets, the slide in financial markets along with continued fears over eurozone government debt has jolted confidence badly, he said. “This will cause firms to po...