Economic Update 18th April 2012
No growth until 2013
The UK economy is set to stagnate for the rest of the year due to the stockpiling of cash by companies according to a report from the Ernst & Young Item Club.
The ITEM Club says that business investment grew by only 1.2% in 2011 even though businesses had £754 billion on their balance sheets. Only 0.4% is predicted for business investment growth for 2012, rising to 1.5% in 2013.
With the government focused on cuts and austerity measures, and with the Bank of England concerned that too much quantitative easing (printing money) could stoke inflation, it is only the private sector that can be looked to create growth according to the report.
ITEM Club chief economist Professor Peter Spencer said, "Until these companies stop stashing the cash and start increasing levels of investment and dividends, the economy will remain on the critical list."
Grants for apprenticeships
Up to 40,000 wage grants are being offered by the National Apprenticeship Service for SME employers to hire an apprentice aged between 16 and 24 years old.
Up to three grants can be made per employer.
The grants will be for £1,500 and can be given on top of training costs that are already met in full for 16 to 18 year olds, or up to 50% for 19 to 24 year olds.
Members wishing to check their eligibility to receive a grant should go to
CPI inflation up
Consumer Price Index (CPI) inflation for March rose to 3.5%, up from 3.4%t in February. Upwards inflationary pressures came from food, clothing, recreation and culture. Downward pressures came from electricity, gas, other fuels and transport.
By contrast Retail Price Index inflation fell to 3.6% in March 2012, down from 3.7 % in February. The biggest downward pressures came from the costs of motoring, fuel and light. Upward pressures for RPI inflation came from food and clothing.
The figures come from the Office for National Statistics.
The Bank of England has suggested that inflation may remain above 3% for the rest of 2012.
Construction output flat
February 2012 construction output was 4.6% lower than in February 2011 according to the Office for National Statistics.
However for the three months from December 2011 to February 2012 compared to the same three month period year ago construction output went up by 0.2%.
Drop in jobless total
UK joblessness fell by 35,000 to 2.65 million between December 2011 and February 2011 bringing the unemployment rate down to 8.3% from 8.4%. The information comes from Office for National Statistics figures. This is the first drop in unemployment since the middle of 2011.
Youth unemployment is at 22.2%.
Total pay (including bonuses) rose by 1.1% compared to a year ago. Pay (excluding bonuses) rose by 1.6%on a year earlier.