On Friday we will release Economic Prospects: 2012 - our view of what the year ahead holds. Ahead of that, here is a look back over the key economic issues in the last twelve months:
- Weak consumption was driven by falling real incomes. This was partly a result of high inflation: CPI hit 5.2% in September. But 2011 should be the year in which inflation peaked: the Bank of England's Monetary Policy certainly thought so as it increased its asset purchases programme in October, citing substantial risks to demand and growth.
- This led to a series of downgrades to growth forecasts, most notably by the OBR, which now means the Chancellor will have a harder time reducing the deficit, with the fiscal targets being met later than was originally intended.