Forecaster: UK economy 'worse than we thought'

Ernst & Young has downgraded its forecast for UK gross domestic product (GDP) to just 0.9% this year - significantly below the 1.4% it predicted three months ago - as it described the economic situation "worse than we thought".

The independent forecaster's Item Club, which calculates GDP using the same measures as the government, said growth should pick up to 1.5% in 2012, but this too remains well under its previous 2.2% estimate for next year. Earlier this month, official figures showed the UK economy grew by 0.1% between April and June, less than the 0.2% estimated previously. Ernst & Young said the economy may need new growth measures to get back on track as global uncertainty - particularly in the eurozone - had frayed business and investor confidence. However, it said it did not believe the coalitio...