Double-dip recession 'over and recovery on the way' – EY ITEM Club

The Ernst & Young ITEM Club has reported that Britain's double-dip recession is over and the recovery is gathering steam.

According to the ITEM Club, the economy will return to growth over the final six months of the year, boosted by falling inflation and a pick-up in consumer spending.

As reported in The Telegraph from there, "the recovery could be quicker than expected" as confidence will recover sharply if eurozone leaders deliver on their promises for a banking union and growth pact.

However this comes at a time when the IMF is expected to downgrade the UK from the 0.8pc growth predicted in April to something closer to the current consensus of 0.3%.

Peter Spencer, ITEM's chief economic adviser, said: "Spiralling inflation has cut real wages by 7.5% over the last four years, but the squeeze is almost over. Inflation is now coming back to heel."

Spencer added that household disposable incomes to rise by 1.5% in the final three months of year compared with the same period in 2011 and by 2.5% in the first quarter of 2013.

The recovery in family finances will underpin growth of 1.6% in 2013, accounting for two-thirds of the total increase in output.

ITEM expects inflation to fall to 1.7% in the final quarter of the year.