UK Economy Forecast 'To Shrink 0.5%' In 2012
Britain's GDP will shrink by 0.5% in 2012, a leading think tank has forecast.
The prediction by the National Institute of Economic and Social Research (Niesr) was down sharply from its zero growth forecast in May. It is one of the gloomiest assessments of the state of the economy so far.
It also downgraded its forecast for UK growth in 2013 from 2% to 1.3% and said the effects of the Jubilee reduced growth this spring by 0.4%.
Official figures published last month showed the economy contracted by 0.7% in the second quarter of 2012 alone.
The deterioration in the UK's economy this year has been "more pronounced than even we expected", said the think tank, which also said Chancellor George Osborne has "scope for a less aggressive path of fiscal tightening" and should consider stepping up investment in key projects to boost growth.
The report said the Government's decision to implement austerity immediately after it came to power may have cost the country a total of 16.5% in GDP growth over a decade.
"The scenarios suggest that the recession in 2012 could have been avoided had fiscal tightening measures been delayed," the report said.
"The concern today is that the Great Recession starting in 2008 and the consequent early fiscal tightening policies may lead to significant losses in output and a protracted period of high unemployment."
The report forecast world growth slowing to 3.3% this year and 3.7% in 2013, with unemployment in some countries rising to levels higher than those of the Great Depression of the 1930s.
Niesr predicted that "tensions will heighten further" in the eurozone as Germany enjoys above-trend growth, while southern Europe remains "in deep recession".
While the report predicted the euro will survive, it forecast that Italy and Spain would need support and warned "the prevarication of the past four years can no longer continue".
It also warned that the US is likely to fall back into recession unless the current stand-off between the White House and Congress over budget cuts is resolved.
what do you think?
My mates boss thinks it's good business not investing in new tooling for his job. No profit in spending out, he says. It would show as a poor month in his figures, and the banks would be less than pleased. My mate is struggling to do his job, quality is suffering, production is poor. Sounds a bit like this government.
aa aa That seems to be the problem everywhere. No one is prepared to spend money to boost the economy
And that, Dave, answers your question about how borrowing can improve debt: it puts money in people's pockets which is then spent - providing an upturn in the economy - which, if timing and the fates allow - provides a foundation for longer-term improvements. There's NO OTHER CHOICE LEFT.
yes Keith, lets all keep digging the hole and see if we pop out at the other end and its all sunny and bright and there is free stuff hanging of the trees for us all to pick and live forever in paradise.
there is another choice. PAY OFF LABOURS DEBT !!!! I can shout too.
Keith. Not Convinced. The money sitting in peoples pockets now has already been earned not borrowed and they aren't spending it. Borrowing to give them more money not to spend seems daft. You mention timing and the fates and I suspect that is just it.Govts wont get us out of this mess we will need a lot of luck
" should consider stepping up investment in key projects to boost growth " which translated means, spending large sums of taxpayer`s money to make it appear that the country is " Hard at it " Why not stop importing that which can be produced here then we really would be " Hard at it ".
Edgar. And the large sums of taxpayers money they speak of is really large sums of borrowed money. Beats me how borrowing more gets you out of debt
we cant produce it all here anymore thanks to the EU. Dave...apparently ed balls knows the answer to that, or at least he has made one up in order to fool us all, which is the age old socialist trick.
tb. He certainly doesn't inspire confidence in me and comes across as rather smug. Come 2015 if and when he is in govt he is going to get an almighty shock
Doom, doom, dooooooooooom!
Read this and weep you tory clowns !
They won`t, " We " are the ones who must weep.
Nice positive comment Lee which really has advanced the discussion
another socialist with poor eyesight and an even poorer memory. the fact is that after 13 years of wasing by the last pack of jokers in government, 0.5% might be a good result.
good result for who exactly mr bulgin.
always nice to read a good intelligent, well constructed post little chance of that with Lee
Michael. He can't see past political dogma. I have no doubt they all see me as a raving right winger and its just not the case. I call it as i see it and that includes criticism of the all parties
Another news source is running the story of the third Californian city in five weeks to file for bankruptcy. It seems our friends across the pond are in deep do-do as well.
The whole of Western civilisation is pursuing a set of ideas which just do not work and they will not give them up ! Internationalism the Bilderburg way
so the socialists.....is this baby face osbournes fault as well ?
Trust in George 'babyface' Osbourne to make a bad situation worse
how do you know that he made it worse. theoretically ,without his policies things could be even worse than they are. we just don't know. which means that your speculation is just coming across as anti tory rubbish.
and mr bulgin how do you think your comments are coming across. face facts you cant prove that without osbournes policies things might be worse. however it can .has and continues to be proven that his half baked policies are making things worse
This just goes from bad to worse. How long before Ed Millibland starts campaigning to make sure he loses the 2015 election? His party don't know how lucky they were to lose the last one.
I think they Know EXACTLY how lucky they are.........THEY engineered it that way!
Malcolm. I wouldn't put it past them They are politicians after all, you know one step removed from pond life
If you give one man a million pounds, he might buy a colour telly. If you give a thousand men a thousand pounds, they may all buy a colour telly. The coalition believed it best to give million pounds to themselves and their rich hoarding mates, who won't spend it. You do not need these costly "think tanks" to work that one out. Dave, you are so right. It was a good ploy of Labour losing the election. The Lib Dems will be posted into oblivion now and the Tory's will no longer be given credence as the party capable of running the economy.
the man with a million pounds might also start a business and employ some of the thousand. tell your theory to Vince Cable and see what reaction you get. Stop fantasising.
Dream on t.bulgin. The million pounds, were the tax breaks given to the rich who have no intention of starting a business. Stop dreaming and get out of Vince Cable's bed. He is not good for you.
Michael. I believe you are right in what you say about the coalition partners but what bothers me is I don't see what Labour will do differently to improve things. We are all going to hell in a handcart
Dave, I love your posts and I agree. I am not a labour fan either. I want to try that new one Chris is on about
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These growth forecasts don`t worry the super rich ,they have stolen all the western banks money now bailed out by us . The crooks will lend it to countries at high rates to make even more.The 1% club is very exclusive and we continue to vote in self interest Governments WHO SERVE THEM.
I suppose this was caused by the last government too !!! ha ha. It seems all of our politicians are not to good, don`t forget the unpaid taxes, we`re ALL supposed to be in this together to help the Nation. It will never happen as we all now know, we are being led a merry dance by the people in power and expected to believe the pathetic lies that come out. Crooked to the core !!!!!
Good thinking sh*g, lets put the loonies like millipede back in charge eh!
And there Calamity Cameron being seen at every Olympic event especially if ther is a chance of a gold medal he shuld be at his deck although there are no tv cameras inhis office
Its not a bad result having the economy flatlining for a few years after all the reckless spending & debt building of Liebour. Osbourne as done the right thing in targeting debt reduction this has helped us to keep our AAA rating which will pay dividens eventually. He has also reduced the tax for EVERY worker putting more £ in the working man's pocket then liebour ever did.
In Japan the economy has flat lined for decades - they see it as a normal way of life f the economy is flat, inflation is zero - no need for price rises, wage increases etc unfortunately governments like inflation and growth as it helps to pay off the debts of previous governments
.WHAT WONDERFUL NEWS !!!!!!! HIP, HIP, HOORAY !!