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Last Updated: Monday, 23 April 2007, 12:49 GMT 13:49 UK
UK economy 'skating on thin ice'
Wage packet
The Club believes we are borrowing too much and saving too little
An influential forecast group is worried about the risks individuals, firms and ministers are taking with amounts borrowed.

Ernst & Young's Item Club spring forecast said people are "overly relaxed about risk" and are "spending as if it was going out of fashion".

Club chief economic adviser Peter Spencer said: "The bottom line is that we are all living beyond our means."

The Treasury said the UK's performance and household finances remained strong.

The report highlights the current deficit in the public sector and expresses surprise that it built up at a time of economic strength and buoyant tax revenues.

"If the Chancellor is forced to borrow so much when the economy's so sweet, what will happen when it turns sour?" Mr Spencer asked.

"Ultimately we are all skating - not to say wobbling - on thin ice," he added.

Growth 'impressive'

The Item club also says that the business sector is driving economic growth faster than either government or consumer spending.

It points out that business investment at the end of last year was 13.5% higher than it had been a year before.

"The UK's macroeconomic performance, in the words of the IMF, 'remains impressive' with the UK economy having now grown for a record 58 consecutive quarters," a Treasury spokesman responded.

The Treasury said UK net debt was lower than the European average, as well as the US, and was second lowest in the G7.

"Household finances also remain strong, having benefited from robust growth, rising employment and low and stable interest rates," the spokesman added.

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