Our outlook for the UK Economy

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This week we are publishing our mid-year review of Economic Prospects 2011. Today's blog summarises our central outlook for the UK Economy.

Tomorrow we will consider the risks to this forecast, and later in the week we will discuss the outlook for the international economy
2011 q-o-q %growth
Q1Q2Q3Q4
Consumption-0.60.30.20.2
Falling real incomes as a result of high inflation and subdued wage growth combined with a fairly static labour market mean that consumer spending growth is likely to be weak in the second half of 2011.
Government Spending1.0-0.5-0.3-0.3
Government spending will be a drag on growth in the second half of 2011 and into 2012 as spending cuts kick in.
Investment-4.43.90.61.1
Despite a contraction in the first quarter of 2011, business investment is expected to be strong in the latter half of the year in line with consistently strong investment intentions.
Exports3.70.41.71.8
Imports-2.30.20.81.0
Strength in global demand should mean export growth exceeds import growth for the rest of 2011 and into 2012, ensuring net trade adds to growth in both years. However, we're unlikely to see another contribution to growth on the same magnitude as 2011q1.
GDP0.50.40.40.5
Modest growth should continue in the UK in the second half of 2011.
Downside risks include the potential consequences of Greek default and weakening global demand reducing export growth. Upside risks include labour market improvements leading to stronger consumption and easing credit conditions enabling companies to increase investment – more on this tomorrow.

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