National Minimum Wage

National Minimum Wage
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growth by most forecasters. These revisions have been substantial in the last three or four
months, with the median of independent forecasts for growth in 2012 falling from 1.8 per
cent as recently as September 2011 to just 0.4 per cent in January 2012, at the time we
considered our recommendations. In November 2011, the Office for Budget Responsibility
(OBR) and the Bank of England also revised their estimates for growth in 2012 downwards.
There has also been some downward revision of forecast growth in 2013.
Figure 5.1: Gross Domestic Product Forecasts, UK, 2011-2013
Median of forecasts for GDP growth (per cent)
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2010 February
2010 March
2010 April
2010 May
2010 June
2010 July
2010 August
2010 September
Forecasts for 2011
2010 October
2010 November
2010 December
2011 January
2011 February
2011 March
2011 April
Month of forecasts
2011 May
2011 June
2011 July
2011 August
2011 September
2011 October
2011 November
Forecasts for 2012 Forecasts for 2013
Source: HM Treasury Panel of Independent Forecasts (monthly, February 2010-January 2012), based on ONS data, GDP growth (ABMI),
quarterly, seasonally adjusted, UK, 2011-2013.
5.5 These recent revisions highlight the degree of uncertainty that is attached to these forecasts
this year. The outlook for investment and trade has weakened notably in the last few months,
whereas the outlook for consumer and government spending was already weak. Many
forecasts take account of the difficulties in several eurozone countries but most assume that
the European Union (EU) will muddle through and a major adverse economic shock will be
avoided.
5.6 In Chapter 1, we noted the importance of the components of growth to the low-paying
sectors. The prospects for consumer spending will affect low-paying sectors such as retail;
hospitality; and leisure, travel and sport. The level of, and growth in, government spending
will be an important determinant of prospects for companies in the social care and childcare
sectors, which rely heavily on government funding of places. Hospitality, cleaning and
security will also be affected by changes in government spending. The outlook for trade will
be a significant factor for low-paying sectors, such as agriculture, food processing and the
manufacture of textiles and clothing. Tourism is also important for retail, hospitality and
2011 December
2012 January
3.0
2.5
2.0
1.5
1.0
0.5
0.0