Brits can expect increased taxation and reduced government spending as those in power work to bring the UK out of recession.
BestInvest head of business development Richard Brown said the possible change in government following next year’s election will have unknown effects on the economy. However, he added that the UK will continue to see economic recovery and conditions will remain tough.
He predicted a spike in inflation over the next three months, largely due to increased oil prices. However, he expects oil to settle at around $70 a barrel, down from the current level of around $78.
Government borrowing, which is now at £200 billion, will help keep inflation down while the government will have to end its quantative easing programme as it cannot keep printing money, he added.
While Brown admitted there was a measure of consumer confidence returning, he warned: “We’ve dug ourselves into a 20ft hole and we’re about 10ft out of it, but we’ve still got a long way to go.”
Brown added although the cash for cars scheme has been successful it will soon end, while the VAT reduction of 2.5% will cease in the new year.