When Will the Economy Recover?

Capital Economics has forecasted it could take up to two years for the UK economy to begin to grow once more.

Jonathan Loynes, chief European economist at the firm, explains that the coming year is likely to be largely one of contraction.

Towards the end of 2009, however, he predicts that this contraction could slow and ultimately level out.

In 2010, this economic plateau is expected to last for some months before growth begins to be seen towards the end of the year.

However, it could be longer before some conditions return to their previous level.

For instance, Mr Loynes identifies house prices as one area where little growth is likely to emerge over an extended period.

The availability of lending which gave the credit crunch its name is to remain a characteristic feature in the long term, he anticipates.

But he notes that, eventually, the population will begin to forget about the financial difficulties experienced during 2008 and 2009.

As the memories fade, the economist expects that consumer behaviour will again return to the sorts of practices seen in recent years.

Ultimately, he predicts that a similar downturn in fortunes is inevitable at some point in the distant future.