In recent weeks economists had been predicting that the economy would just slightly miss a double-dip recession by a very small growth of 0.1%. Unfortunately, even City economists missed the mark as the shocking news was revealed today that the nation is indeed in the grips of yet another recession.
Although there has been much talk of the potential for sliding backwards into a recession, many consumers don’t quite understand the awful significance of this event. After just having recovered, the UK took a downward turn s the UK GDP shrank 0.3% in the final quarter of 2011 and .03% in the first quarter of this year. This was truly a shock to government as well as economists as they had missed the mark by almost one-half of a percentage point. This is significant that they could have been so far off with their calculations.
So what does this mean for Britons? In effect, a recession is defined as two consecutive quarters of decline in the economy. It looks as though government will try to combat this news with increased fervour in their austerity programme. The public sector will most likely try to cut costs even further which means social programmes are likely to lose even more financing and jobs will be cut by the tens of thousands.
Since Britain’s debt is already at record levels, there is mounting pressures on government. It may still be too early to predict what moves the coalition government will make next, but it is almost certain that they will advance austerity measures on a country already plagued with sacrifice. The Prime Minister admitted that recovering from a recession which is the worst in ‘living memory,’ but the Labour shadow chancellor struck back with an “I told you so!”
Labour has always contended that the austerity drive was ‘self-defeating’ with cuts in spending and taxes rising almost by the day. The party further lashed out at David Cameron and George Osborne who they decry as ‘arrogant’ in their nonchalance when they were warned that austerity would lead the nation back into recession. As those predictions have now proven true, all eyes are on Labour to see if they will finally be heard.Read more
Debt November 26, 2011
The government’s recently implemented austerity programme may face a significant amount of criticism after new financial forecasts are set to indicate slower growth for the coming fiscal year and borrowing that is more excessive than previously thought.
Chancellor George Osborne’s fiscal budget statement for autumn is expected to reveal that independent economic growth forecasts will be cut by nearly 50%, bringing the economic growth rate to approximately 1%. Despite efforts to increase austerity and promote decreased government dependency, some argue that the Chancellor will be unable to formulate a plan that will prevent economic growth from consistently weakening.
Additional pressure comes from government budget restrictions, rising youth unemployment, a growing euro zone crisis, and the fact that many people are still not convinced by the austerity program. The autumn fiscal statements are managed by the Office for Budget Responsibility (OBR), which was established by Osborne about one year ago to provide accurate forecasts without the hindrance of interference from financial ministers. The OBR is expected to reduce its projected market growth statistics, and forecast a higher level of loan dependency during the next half decade.
Another reason why many are skeptical of the austerity programme is because Chancellor Osborne will be required to meet the coalition’s proposed fiscal targets using an extremely small margin. Meanwhile, constant turbulence in the financial market and lower consumer confidence continue to threaten the credibility of the public financial sector.
However, some economists believe that abandoning the proposed austerity plans at this moment in time could lead to a considerable worsening of the current financial crisis. Being that the budget deficit equaled more than 9% of gross domestic product in the 2010/11 fiscal year, many say that Chancellor Osborne has no other option but to continue forward with the austerity programme.Read more
Economy October 30, 2011
According to 100 of the UK’s leading economists, Chancellor Osborne should take drastic measures immediately in order to avoid another recession. They are calling for a ‘Plan B’ in order to salvage existing jobs whilst creating new ones in order to forestall an economic catastrophe.Read more
In their most recent statement, the IMF is warning that the UK government’s austerity programme may need to be set back if growth continues slowing. This is the third forecast in as many months that has the economy on a downward spiral.Read more
Speaking to the BBC in Birmingham, Deputy PM Nick Clegg voiced his concerns over the state of the economy in the UK amidst controversy over the austerity programme which opponents say is leaving little room for economic growth. In his words, the problems are “very serious” and government won’t budge from the path it has taken.Read more
Under the previous Labour government we called this a pre-Budget report, but Chancellor George Osborne calls it his ‘Autumn Statement.’ In any case, this is where government paints a picture of where we are, where we have been and where we can expect to go financially in the UK.
The date has been set for late November, the 29th to be exact as it was reported to MPs as the chancellor was addressing them in the House of Commons. However, just before Chancellor Osborne’s statement, earlier on the same day, the Office for Budget Responsibility will release their independent economic forecast for the coming year.
At the moment the Office for Budget Responsibility is forecasting growth to be expanded by 1.7% for the current year but this is much higher than forecast by most leading economists. With inflation hitting 4.4% in just the month of July alone amidst markets that are falling by the day, there is a very real fear that the growth rate will not come near that projected figure.
As well, many economists feel the increased standard VAT rate will impact the forecast for economic growth as fewer businesses will be showing profit and as a result, will be cutting jobs. It is already evident that consumers are cutting back on spending which plays a huge role in the economy.
In a recent statement, the chancellor called for “credible cuts” when speaking of countries with huge deficits. This could relate to the UK as well as most leading economies around the world that have recently experienced rating downgrades.
In any case, properties are losing value, there is a concern over the Eurozone debt crisis and even our neighbours across the Atlantic are realising debt woes. It will be interesting to note how this will play out in the chancellor’s statement, but we can probably expect that the current austerity programme will be highly emphasised.Read more
Economy September 11, 2011
In efforts to boost economic growth whilst cutting the overwhelming national deficit, Chancellor George Osborne is considering a number of options. The problem he is presented with is how to boost the economy whilst striking to rigid austerity plans as it appears to be a contradiction in terms.Read more
According to top Union sources, Britain could be facing widespread strikes in the coming month due to their austerity programme and major cutbacks. These measures would significantly impact public pensions which is why the Trades Union Congress (TUC) is calling for government to ditch what they are referring to as a “programme of self harm.”Read more