Deflation ‘may hit UK in 2015’ warn experts, who fear May’s General Election could knock stability
Deflation may set in this year and the May General Election could be a mess that leaves England ‘dangerously unstable’, a leading independent forecaster warns today.
The Centre for Economics and Business Research (CEBR) has predicted inflation could turn negative in the spring and summer for the first time since the financial crisis, as the price of goods and services falls.
Separately, the influential Institute of Directors warned of ‘dark clouds in Europe’ and predicted the Bank of England will maintain interest rates at the record low of 0.5 per cent for at least six months.
In its top ten predictions for 2015, the CEBR attacked Labour and the Liberal Democrats for rejecting reforms to ‘bias in the (electoral) system’, which favours the Labour party.
It added that if this rejection and a large SNP presence in the House of Commons put Ed Miliband in Downing Street the effect in England ‘could be dangerously unstable’.
The think-tank predicted the Consumer Prices Index (CPI) measure of inflation will mean deflation for the first time since the index was launched in 1996.
