EY ITEM Club downgrades growth prospects for 2020

The EY ITEM Club has published an interim forecast that downgrades the near-term growth prospects for the UK economy but it still expects slightly improved expansion in 2021.

The key findings from the interim forecast of the EY ITEM Club is that UK GDP will contract by 11.6% in 2020, a deterioration on the 10.1% decline expected in October’s Autumn Forecast. GDP grew 15.5% q/q in Q3 2020, down from the 16-17% forecast in October. The EY ITEM Club does not expect the UK economy to return to its pre-pandemic size until late 2023.

The economy is expected to expand 6.2% in 2021, a slight improvement from previously expected growth of 6.0%. However, should the UK trade under World Trade Organization rules from 1 January 2021, the EY ITEM Club expects growth to fall to 5.0% in 2021 and 3.5% in 2022.

Last week research from Builders’ Conference reported that more than £5.7 billion in new contract awards were recorded during November. The figure is unusually high for November which is generally the month in which the sector traditionally begins to  slow ahead of the Christmas shut down.

The impact of the pandemic, however, was reinforced this week when MACE revealed that the group’s 2020 turnover was expected to be around £1.7 billion, down  from £1.8 billion in 2019. Consultancy workload is holding up but construction revenue is expected to be down £400 million to £1.26 billion for this year