UK growth estimate slashed

A key forecaster Monday slashed its growth estimates for the UK and warned the economy has stalled at a "dangerous junction"."The Ernst Young ITEM Club" group cut its gross domestic product (GDP) forecast to just 0.9 percent this year, down from the 1.4 percent it predicted three months ago, and 1.5 percent in 2012, down from 2.2 percent.Uncertainty across the Eurozone, which is predicted to grow by 1.6 percent this year, and a slowing world economy, is undermining business confidence and investment decisions, the ITEM Club added.Furthermore, the ITEM Club warned the Bank of England's injection of an additional 75 billion pounds of quantitative easing (QE) (printing money) is unlikely to put the recovery back on track.The report comes amid a raft of surveys, such as soft manufacturing and services data, which all point toward the UK heading towards a double-dip recession.Peter Spencer, chief economic advisor to the Ernst Young ITEM Club, said "It's worse than we thought. The bright spots in our forecast three months ago - business investment and exports - have dimmed to a flicker as uncertainty around Greece and the stability of the Eurozone increases. "With the UK recovery grinding to a halt, new measures are now needed to help stimulate growth.We think there is scope for targeted tax relief and spending measures to help put us back on track." The report predicts that business investment will be flat this year and exports will increase by just 6 percent, much less than looked likely three months ago.The ITEM Club warned that increased QE would not be the silver bullet to the country's economic woes.Spencer said the Bank should instead consider cutting already record low interest rates from 0.5 percent to 0.25 percent."It would provide a boost to borrowers and potentially help to stimulate consumer spending during the difficult months ahead," he said.Elsewhere, the ITEM Club forecasts that the UK's unemployment rate will increase to 2.7 million by the spring of 2013.The ITEM Club is one of the UK's best-known independent economic forecasting groups.Its quarterly forecasts and special reports consistently achieve widespread coverage from the UK and international media, who frequently refer to ITEM as 'respected', leading,and 'trusted'.