The UK economy: things can only get worse



The UK economy is in dire straits, and the best we can hope for is that things will stay just as miserable for the foreseeable future - according to a new survey of more than 15,000 AOL users. Just 15% of people felt that things were so bad now that they could only get better from here, and the rest displayed varying degrees of pessimism for the future of the country.

So just how bad will things get?

The poll

AOL users were asked whether they were optimistic about the UK economy now it is officially out of recession. Some 46% said that things will simply stay as bad as they are for some time, while a shocking 39% of people said things were going to get worse before they get better.

The news last week that the longest double-dip recession since the 1950s was over brought some relief, with an unexpectedly large 1% growth in the economy. However, commentators have been quick to put this into perspective.

Azad Zangana, European Economist at Schroders, said:"It is worth bearing in mind that there are some temporary factors that have artificially boosted the latest quarterly results that will drop out of the numbers. Firstly, the London 2012 Olympic Games will have provided a boost from ticket sales, extra tourism and additional investment coming to fruition. Secondly, the reversal of the extra bank holiday effect to celebrate Her Majesty's Diamond Jubilee also fell in this quarter. Whether the better than expected numbers continue into the fourth quarter is difficult to judge."

No difference

The factors boosting the economy have made little or no difference to most of us. Professor Philip Booth, Editorial Director at the Institute of Economic Affairs, pointed out:"The difficulties faced by the UK economy are not fully reflected in [the] growth figures. Living standards are falling, productivity growth is weak, and the economy has, in fact, been flat over the last year.

It's unsurprising, therefore, that we see no signs of things improving. In fact, as 39% of people predicted, there are some strong signs of things getting worse.

Zangana explained that a survey of manufacturers hinted at trouble in the fourth quarter, while rising food and energy prices - already signaled for the winter - could cause problems for consumer spending, adding: "This is likely to hurt retailers in the run up to the crucial festive shopping period."

Price rises

EDF became the latest in a long line of energy suppliers to announce an increase in prices this month, with an astonishing 10.8% rise in 7 December. Ann Robinson, Director of Consumer Policy at, says: "This is the final hammer blow for energy bills this side of Christmas.... Some households are already performing a juggling act to balance budgets and keep their heads above water. And the added pressure of the latest round of energy rises may be the straw that breaks the camel's back."

Her figures show that the average consumer will see their bills rise from £1,258 a year to £1,334 - something that many people can ill-afford.

Andy Brown, Investment Director at Prudential's Portfolio Management Group, summed up the muted response by saying: "We're in a trendless but volatile period so celebration at this point may be an overreaction."

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