'Clouds gathering for UK economy', warns LSR

The British economy should start 2011 with a fair amount of momentum, but growth could subside over the course of the year, according to the Quarterly UK Economic Forecast published by Lombard Street Research (LSR).

In the second half of 2011, the year-on-year rise in real GDP is unlikely to be much above 2%. Jamie Dannhauser, a senior economist at LSR, says this prediction reflects the deflationary consequences of fiscal tightening and limited, or even negative, growth in the eurozone, Britain’s main export market.

LSR says the outlook for the eurozone continue to deteriorate, threatening the long awaited rebalancing of the British economy towards exports. “Beyond a potentially quite strong rebound this year, there are clouds gathering for the UK economy in 2011,” the report says. more...