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Ernst & Young ITEM Club downbeat on UK

The influential Ernst & Young ITEN Club Report has cast doubt on the short to medium term prospects of growth in the UK economy. While this influential association freely admits that the UK is likely to have left the recession in the final quarter of 2009, it believes this trend will not continue because a number of tax innovations and incentives have been taken away from the marketplace. It specifically highlighted the car scrappage scheme which saw a massive increase in sales for new and nearly new cars in the UK.

When looking at the wider picture, there is most certainly a need to increase UK exports in the short, medium and longer term to ensure the economy will continue to grow. However, there is a growing belief that the massive debt pile in the UK cannot be allowed to grow and as such will impact upon growth prospects in the UK for the foreseeable future. The UK economy has also seen its competitiveness reduced over the last few years with areas such as China very difficult for UK companies to break into while competitors in Europe and the US continue to grow their exports to the Far East and especially China.

Even though it is not all doom and gloom for the UK economy, there is no doubt that government initiatives and incentives have played a major part in the recent improvement in the economy. Will this trend continue into 2010?

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