We all know that, like most of the rest of the world, the United Kingdom economy is in rough shape. It’s facing at least ten years of readjustments as it starts to turn toward increased exports rather than consumer spending, which has been the focus for some time. This is the conclusion of a recent report from the Ernst & Young Item Club – the group responsible for accurate economic forecasting in Britain.

This may be a very difficult transition for local firms that have dealt with domestic customers for many years. They will have to look to overseas markets to try to meet their current sales targets. Peter Spencer, a special adviser from Ernst & Young, said that Britain had been relying on the domestic consumer for almost ten years and that it would not work anymore. The team’s report went on to say that the UK would have trouble reaching even 1% growth in 2010. These are not very exciting numbers for many market analysts.

Spencer went on to say that he felt the UK consumer was simply cashed out and couldn’t go on spending like they had. The Ernst & Young report says that they expect to see a meager 0.4% increase in spending in the country this year. Spencer said that the only way Britain could turn things around is if the world economy started seeing a rapid growth, which is not likely at this point in time. It will take a lot of hard work and enterprise by the UK exporter to overcome these hurdles but Spencer said it could be done.

The success of many UK businesses was dependent on exports but the report said that countries like China weren’t being targeted effectively. The UK had a high market share in many Asian countries but they are a very small player in China. Spencer suggested that this was an important region that the UK had to increase their market share in to ensure the future success of the economy.

In 2011, the Ernst and Young report expects to see an increase in exports for the UK but 2010 will be quite slow. The good thing is that 2011 may see as much as 9% growth and then up to 10% in 2012. This will calm many investors who have felt concerned about the recession and it should help the UK economy to turn around. Figures from last year show that the UK officially ended its recession in October 2009 but this was only made possible by unsustainable measures by the government.

Some of these measures include firms restocking, the car scraping scheme that the government introduced, and increased spending before the VAT increase at the beginning of the year.

Its expected that the positive side effects of these measures will wear off soon which could slow growth significantly in the short term.

Another report by Begbies Traynor says that insolvencies in the final quarter of 2009 were actually 15% lower than the same time a year before. This statistic was likely another result of government support measures to try to keep the economy from plummeting further.

Both reports showed that 2010 might be a tough year for the economy but that things could bounce back in 2011.

Looking to find out more about the consumer spending and the IVA process, then visit Mike Garrett’s site on debt in the UK.