Economic growth?
The consensus expectation for the UK economy in 2010 is now clearly one of growth...
...but how strong will that growth be? A note of caution has emerged from the International Monetary Fund (IMF) which has suggested that the capacity of the UK banks to lend, already much reduced by the credit crisis and loan losses which have shrunk their balance sheets, will continue to decline in 2010. In contrast with the 10 per cent growth rate experienced in the early years of this decade capacity is forecast to decline by 4.5 per cent, after an 8.6 per cent decline in 2009. Credit expansion is a critical fuel for economic growth and if the banks cannot supply it then hopes of a swift return to economic health may prove optimistic. A particular worry for charities is that growth lacks the vigour necessary to turn around the trend of rising unemployment.
Author: John Kelly
John Kelly is head of client investment at CCLA.
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