The professional services firm’s autumn forecast said “deeply disappointing” trade figures have hindered growth over the last six months but falling inflation have seen consumer demand strongly return.
The firm said these trends would continue to gather pace next year, supported by a resurgence of the housing market.
According to the report GDP will fall to -0.2% this year overall, before increasing to 1.2% in 2013 and 2.4% in 2014.
Peter Spencer, chief economic adviser to the Ernst & Young ITEM Club, said: “With exports being battered by the Eurozone crisis and a weakening economic outlook in markets such as the US, India and China, the UK is relying heavily on the high street to come to the rescue this year.
“The fundamentals are in place to enable this to happen. Inflation is coming back to heel, private sector employment is holding up, and the housing market also looks poised for a revival.
“But it’s not the balanced, long term sustainable growth we were hoping for.”
