The Bank of England has warned that a recovery could be stymied by over-optimistic forecasts from businesses.
In its latest quarterly report the Bank said that unemployment could rise significantly if consumer demand "proves more sluggish than businesses have expected". The Bank, along with many bearish analysts, has long warned of the risk of a second spike in unemployment.
Confidence amongst business managers is high, but there is concern that this may skew decision-making and forecasting processes, with firms making unrealistic sales predictions. While consumer confidence is also on the up, the slow rate of growth suggests that any prospective recovery may be rocky.
Unemployment fell during the final quarter of 2009, to 2.46 million. But the Bank has warned that workers will be increasingly unwilling to accept wage cuts following news that the economy is out of technical recession. This would make job losses more likely.
It is presumed that the economy will have continued to expand during the first quarter of 2010.
