No business can afford to be static, now so more than ever. The financial crisis has issued many corporations around the world with a huge challenge: is it possible to survive through sudden change and uncertainty? Sadly, some have not succeeded. The experience of the last five years have shown businesses need to be able to adapt and remould themselves to suit the economic climate at the time in order to sustain prosperity. This is where the EY Independent Treasury Economic Model (ITEM) Club highlights its importance.
Without political or business bias, the ITEM Club provides the only independent economic forecast of the UK economy. Long regarded as one of the most influential organisations in its field it uses the UK Government’s Treasury model to broadcast quarterly reports of the UK’s economic forecast. The recent ITEM summer forecast predicted the UK GDP to grow by 1.1% this year, a welcome positive for businesses. Professor Peter Spencer, the chief economic advisor to the EY ITEM Club, credited consumer spending and the housing market as the driving forces behind this improvement.
Current signs that the UK economy is starting to recover have given hope to many who have been struggling to keep businesses afloat over the past five years. According to the Office for National Statistics, manufacturing production has seen a large growth, 1.9%, in June after experiencing declines in the two months prior. The housing market has also seen a sudden surge thanks to various government initiatives like the Help to Buy loans schemes, which help first-time buyers get onto the market.
With a triple-dip recession narrowly avoided, consumers appear to be more confident, and as a result are more willing to dip into their savings. Additionally, the government’s housing initiatives, such as the Help to Buy loans scheme, are having a positive influence and boosting house sales.
As the official sponsor of the ITEM Club for the past 25 years, EY uses these reports to discuss the latest developments with the UK economy and what will happen next with their clients. Outside the UK, the Eurozone Forecast, which EY also sponsors, provides the latest forecasts for the European economies within the single currency. Additionally, EY also produces a forecast for each of the 22 fastest growing emerging markets in the world, and the impact on business in each country. .
“A growing global market and the domestic market also starting to pick up, plus signs of recovery means 2014 could be a much stronger year than we’ve seen in recent times,” said Mark Gregory, Chief Economist at EY in the UK.