It estimates GDP will grow 1.4% this year and 2.2% in 2011 but the recovery will face a “soft patch” in the coming months.
The report comes ahead of the government’s Spending Review on Wednesday which some fear may stunt the economy, the BBC reports.
“The economy is likely to slow over the winter following a surprisingly positive first half of the year, but I think this will be a soft-patch, not a double-dip,” says Peter Spencer, chief economic adviser to the Ernst & Young ITEM Club.
He warned that low wage growth and rising unemployment along with high inflation, meant the average UK household was “in for a tough time”.
Spencer said the UK would have to wait until late 2011 before it began to see any significant economic improvement.
However, once the uncertainty of what will be included in the Spending Review was over, businesses would be more likely to relax and increase investment.
“Wednesday’s announcement should peel away another layer of uncertainty from the economic outlook and encourage businesses to loosen the purse strings, in much the same way that the formation of the coalition government and the June Budget did earlier this year,” he said.
“Helping the UK out of recession has been a bit like peeling back an onion – removing one-by-one the risks to the economy in order to re-build business confidence.”
