Mixed forecasts for UK economy

The UK’s economic 'golden period' could be coming to an end, according to some commentators.

Britain has enjoyed a decade of low unemployment and low inflation, but City consultancy Deloittes have warned that 2005 could see a 'backlash' from the slowdown in the housing market, perhaps triggering a fall in consumer spending and a rise in unemployment

They also predict economic growth of 2% this year, which is below Chancellor Gordon Brown's forecast of 3% to 3.5%.

"Although 2005 may not be the year when things go completely wrong, it will probably mark the start of a more difficult period for the UK economy," said a spokesperson.

Meanwhile, a separate survey has shown that the number of profit warnings issued by UK companies rose by 40% in 2004.

According to a study by Ernst & Young, nearly 300 UK firms issued profit warnings last year, which is about 90 more than the previous year.

Successive interest rate rises, the escalating cost of oil and the weak dollar have all been blamed for the impact on company profits.

However, more positive news has come from a survey by Lloyds TSB, which suggests that UK firms are enjoying higher sales, orders and profits than they did 12 months ago.

Over half the companies questioned reported increased sales in the last six months of 2004, some 33% reported increased profits and the same proportion expected a similar rise in 2005.