In this think piece Ruth Lea, Economic Advisor to the Arbuthnot Banking Group and Senior Fellow of the Adam Smith Institute, discusses what 2011 holds for the British and global economies. There is some room for optimism, she says, but overall the near future isn't bright.
As we enter 2011 there is little doubt that the UK economy is slowing from the heady grow rates recorded in the middle of last year. But this is only to be expected as those growth rates reflected special factors that are highly unlikely to be repeated. However, this should not be a reason for complete gloom. The economy probably grew by a better-than-expected 1¾% last year and it can be expected to grow by a similar magnitude this year. Such is the momentum of recovery a double dip seems most unlikely. But there will be many risks and there are many reasons to be cautious.