… and subdued investment finishes them

Investment by British companies will not recover to its pre-crisis levels until 2015, ensuring several more years of weak growth, according to a respected economic forecaster.

The Ernst & Young ITEM Club warns in a report today that on-going uncertainty over the eurozone crisis and the Coalition's austerity will continue to hold down company spending. The forecaster expects investment to grow by just 2.3 per cent this year and 3.9 per cent in 2013, before picking up to 8 per cent between 2014 and 2016.

The ITEM Club said that the UK had performed worse than the US because of austerity and a reliance on eurozone export markets. Germany had performed better because of its exporters' strength in emerging markets.