Fiscal watchdog downgrades UK growth forecast

[Infinite Chaos]

The new independent fiscal watchdog has downgraded the economic growth projections for the UK economy.

The Office for Budget Responsibility (OBR) predicts the economy will expand 2.6% in 2011, down from the 3% to 3.5% estimate given in Labour's last Budget.

The lower figure will likely increase the impetus of the coalition government to cut public spending, as lower growth means fewer tax revenues.

Yet the OBR also says the deficit and debt will not be as bad as forecast.

It predicts that the UK's public deficit will fall, down to 10.5% of GDP in the 2010-11 financial year, from the 11.1% estimated by Labour.

For overall net government debt - the sum of all borrowing - the OBR estimates this will decline to 62.2% of GDP in 2010-11 from the previous estimate of 63.6%.
BBC Economics

I'll take 2.6 growth most days of the week - and if the Eurozone as a whole continues to struggle and recovery in the US stalls - 2.6 will be excellent against the prevailing tide.

 

[alexa]

I'll take 2.6 growth most days of the week - and if the Eurozone as a whole continues to struggle and recovery in the US stalls - 2.6 will be excellent against the prevailing tide.

Certainly sounds good in today's climate.

 

[Lord Tammerlain]

Take away 10.5% from the 2.6% and what do you get?

A 7.9% contraction

The UK is only showing any growth due to government deficit spending

 

[Republic_Of_Public]

As Mrs. Thatcher used to say, if a housewife had to budget and learn to spend within means, then so should a nation.

Alright, the workings of a national economy runs on debt of some kind (don't ask me how), but she had the principle bang on. You can always make savings to trim the books and have more people keep their own money.


Instead of cutting back on the necessaries, the Tories can cut back on the crap: http://www.debatepolitics.com/europ...you-have-scumbag-lib-cons.html#post1058805539

 

[Infinite Chaos]

Take away 10.5% from the 2.6% and what do you get?

A 7.9% contraction

The UK is only showing any growth due to government deficit spending

I may be mistaken but hasn't the same assessment have been put against the economic conditions of other major economies or economic areas been compared with the UK's position to find ours still seems a healthy one?

Genuine question - I'm no economic expert.

 

[donsutherland1]

IMO, the Labour projection of 3%-3.5% real GDP growth for 2011 was never realistic. It helped put a better spin on a bad fiscal situation and might have been influenced, in part, by electoral politics. FWIW, the IMF was forecasting real GDP growth of 2.5% for 2011. The revised OBR projection is now reasonably in line with the IMF estimate.

 

[Lord Tammerlain]

I may be mistaken but hasn't the same assessment have been put against the economic conditions of other major economies or economic areas been compared with the UK's position to find ours still seems a healthy one?

Genuine question - I'm no economic expert.

The UK position is healthy only in appearances

The UK has the same problems that Greece, Spain are facing have faced. It may not be forced to face them today but it will have to face them at some time. Given that most economic stats ( in % of GDP terms) the issues in the UK have been and are around the same levels as Spain etc, it will have the same overall impact on the UK. The UK will be able to spread the problem out over a few more years through the printing press ( ie creating more money from thin air) but that will lead to much higher levels of inflation

 

[Infinite Chaos]

The UK position is healthy only in appearances

The UK has the same problems that Greece, Spain are facing have faced. It may not be forced to face them today but it will have to face them at some time. Given that most economic stats ( in % of GDP terms) the issues in the UK have been and are around the same levels as Spain etc, it will have the same overall impact on the UK. The UK will be able to spread the problem out over a few more years through the printing press ( ie creating more money from thin air) but that will lead to much higher levels of inflation

Thanks, I've found this interactive page on the BBC website where you can view debt / deficit / economy / depth of recession and unemployment rate.

I do still feel very optimistic and as Don Sutherland says - the IMF has seemed to say the growth is real growth. We do after all have a huge debt to pay off (which I want paid off faster) and from my limited knowledge of economics would say that the current practice of printing more cash (quantitative easing) was for the main crunch period - a period we are hopefully now past.

 

[PeteEU]

Unemployment is still going up in the UK according to the news this morning. Where as unemployment is falling in Spain and other countries (for now).