What Is The Outlook Like For The Year 2012?

What Is The Outlook Like For The Year 2012?

by Caleb James on 10 Feb, 2012

Olympics, Queen’s Diamond Jubilee, double dip recession, and Eurozone problems – one thing is certain, it’s not going to be an easy year.

According to the Centre for Economics and Business research Centre, the UK is likely to hit a ‘temporary recession’ this year. All across Britain, households will be faced with a hard year financially and unfortunate unemployment figures coupled with meagre wage increases only makes things worse.

The whole retail sector is expected to run into difficulties and unfortunately, it employs tens of thousands across Britain. So redundancies are very likely and already high street big names such as Blacks Leisure (outdoor clothing retailers), Past Times (gift shops), and not least, La Senza, the lingerie retailer have sounded alarm bells. Barratts the shoe retailer announced just this week that it couldn’t find a suitable buyer for the business and would be going out of business with the loss of 1,600 jobs. Industry analysts predict 30.000 jobs could disappear this year.

Jamie Constable, the CEO of RCapital, the restructuring  company, said that the current situation could be even more severe than the 2008 recession, which saw the Lehman Brothers collapse. In that year, more than 20,000 job losses were sustained and the iconic Woolworths shut their doors. He says “High-street retailers are facing rent rises and wage inflation which is coupled with a drop in sales for many retailers. The numbers simply don’t add up”. He continued that the extra burden of VAT bills in the first quarter of 2012 could be the “final straw” that tips some firms into closure.

The CEBR has said that London’s economy would very likely be affected negatively by the Olympics, as the regular visitors to the capital might be put off by the expected crowding that is certain with the games. On the other hand though, the chief executive Douglas McWilliams is forecasting a ‘great success’ with the Queen’s Diamond Jubilee.

2012 could be the period when the Eurozone starts to fall apart according to the think tank CEBR and predicts that the European banking sector will require bailing out. They predict the chance of one country (or more) saying goodbye to the single currency bloc in 2012 as 60 per cent and went further to say that the total break up is virtually definite by 2022.

The CEBR continue their bad news by predicting a ‘modest to severe’ recession in Europe. The European economy could decline anywhere from 0.6 per cent to 2 per cent depending on how the crisis is managed.

In the USA, the outlook is less bleak with estimates at 2 per cent growth due to technology excellence and strong profits in the private sector.

 

About the Author

Caleb James


Caleb James is a financial advisor and journalist, who contributes regularly to financial blogs and industry publications.