BRITAIN ON BRINK OF DOUBLE-DIP DISASTER
The hard-hitting report puts pressure on the Government to do more to help the economy
Sunday October 16,2011
By Geoff Ho
THE Eurozone debt crisis has caused an influential economic think-tank to dramatically downgrade its UK growth forecasts and warn that the risk of a disastrous double-dip recession is rising.
The hard-hitting report from the Ernst & Young Item club, out tomorrow, puts pressure on the Government to do more to help the economy ahead of its Autumn Statement.
The think-tank has downgraded its GDP forecast to just 0.9 per cent this year, down from the 1.4 per cent it predicted three months ago, and to 1.5 per cent in 2012, down from 2.2 per cent. In 2013, growth could recover to 2.5 per cent.
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It said business confidence had been undermined by the unending uncertainty across the Eurozone and a slowing world economy. This has had a knock-on effect on investment.
 It’s worse than we thought  |
Peter Spencer |
Peter Spencer, the Item club’s chief economic advisor, said: “It’s worse than we thought. The bright spots in our forecast three months ago — business investment and exports — have dimmed to a flicker as uncertainty around Greece and the stability of the Eurozone increases.
“The risk of a double-dip has definitely gone up. It could happen in the New Year.”
He warned: “We have based our figures on the assumption of an early resolution of the crisis gripping the Eurozone, which may prove optimistic in view of the very slow progress made until now. In that case, the outlook for the UK would inevitably be a lot worse.”
Spencer said new measures were needed to stimulate growth. He urged the Government to use savings in the austerity Budget to support employment for example by cutting employer national insurance contributions for under 21s.
The Item club says that there is also an opportunity for the Chancellor to support UK growth by stimulating the housing and construction industries. Spencer said: “Cutting stamp duty, particularly for first time buyers would, in our view, be money well spent. The Chancellor should perhaps also consider putting up sin taxes to pay for this kind of tax cut.”
He also recommended a cut in interest rates, saying “It would provide a boost to borrowers and potentially help to stimulate consumer spending during the difficult months ahead.”
Item says the Bank of England’s injection of an additional £75 billion of Quantitative Easing is unlikely to put the recovery back on track.
Also On Express.co.uk
VIRGIN ATLANTIC NEARLY 'DISAPPEARED' SAYS BRANSON
Sir Richard Branson
Sunday October 12,2008
By Tracey Boles
Virgin Atlantic may have “disappeared” if Halifax Bank of Scotland had gone under, Sir Richard Branson has revealed.
The billionaire founder of the airline said in a TV interview that HBOS refused to let his company withdraw £1billion of itsmoney when it ran into difficulty last month.
Sir Richard said: “And now, fortunately, Lloyds (TSB) bank made a bid for them and we got our money out.”
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