Tuesday, January 25, 2011

 

UK Economy Looks Even More Fragile After Shock Figures

Today's figures make grim reading for the Coalition government. Osborne plugs the excuse that it was the snow which caused it. He would say that I suppose but nerves must be jangling a bit around the Cabinet table. Especuially as once the effects of the bad weather are allowed for, the ONS still sees a 'flattish' growth picture.

This must be an opportunity for Ed Balls to advance his analysis that the cuts have been too far and too fast to the extent that our fragile economy might be pushed back into recession.

Hopes for the present quarter as scarcely bullish given the increase to 20% VAT, flat retail sales and the effects of the cuts beginning to be felt. Another quarter of shrinkage and the government will begin to look pretty feeble; Labour's alternative analysis will be looked at more closely as unemployment climbs, saving levels languish and spending power declines. Bob Carnell economist at ING Bank comments:

“These initial GDP figures are based on a fairly narrow series of production indicators and it is probable that the expenditure-based GDP figures in the next release will be less dismal. But with public spending cuts set to bite this year into what already looks a fairly soft starting point, concern over the effect of the UK’s ambitious budget restraint on its growth could begin to mount and willingness to hold sterling-based assets deteriorate.”

Comments:
Skip - why do you leave so many open goals on your postings ?

The (then) Prime Mentalist Gordo * in April 2010 gave his majesterial view that "a terrible month of weather which hindered transport and communications in business in the country." was responsible for a less than encouraging rise in economic growth rather than his own policies.

Same old, same old.

* remember him ? Saviour of the world ??

Kind regards
 
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