Economists warn of risk of double dip following poor growth figures

Economists have warned of the increased likelihood of a double dip recession following the news that the British economy retracted by 0.5 per cent in Q4 2010.

Economists have warned of the increased likelihood of a double dip recession following the announcement that the British economy retracted by 0.5 per cent in the final quarter of 2010. On the New Statesman website this morning, former MPC member Professor David Blanchflower warns that growth figures for the first quarter of 2011 could look equally negative, with the rise of VAT predicted to stump growth for a second quarter running.

In a controversial speech given yesterday, meanwhile, the director of the Confederation of Business Industry (CBI), Sir Richard Lambert, criticised the government’s lack of planning for economic growth. Mr Lambert, who leaves his position with the CBI on Friday, decided to leave office with a sharp critique of the coalition.

He said that whilst the government had got it right on fiscal tightening, they had:

“… taken a series of policy initiatives, apparently for political reasons, apparently careless of the damage that they might do to business and job creation.”

Whilst George Osborne lays the blame for the retraction of the economy on the spate of bad weather in December with, the ONS reports that:

“If there had been no disruption, GDP would be showing a flattish picture rather than declining by 0.5 per cent.”

Labour’s shadow chancellor, Ed Balls, claimed that Osborne’s focus on a politically lead cuts programme was to blame for the lack of growth:

“The government inherited an economy that was strengthening, with growth of 1.1% in the second quarter – thanks to decisions we took to support jobs and get the economy moving… Simply slamming on the brakes is not a credible economic policy.”

While economists analyse what these figures could mean for the British economy, the Conservative press office has taken to picking its way through Ed Balls’ Bloomberg speech in an effort to spin itself out of bad news.

On the same day as the International Monetary Fund revises its global predicted growth from 4.2 per cent to 4.4 per cent, the British economic climate looks like it’s headed for stormy waters; as Ed Balls quoted himself:

“When the facts change, I change my mind.”

Mr Osborne and the Treasury may wish to take note.

17 Responses to “Economists warn of risk of double dip following poor growth figures”

  1. Mike Wiltshire

    RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures: //bit.ly/gswBRV reports @clairee_french

  2. Claire French

    RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures: //bit.ly/gswBRV reports @clairee_french

  3. Alan Crowther

    RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures: //bit.ly/gswBRV reports @clairee_french

  4. lesa

    RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures: //bit.ly/gswBRV reports @clairee_french

  5. Karen Connolly

    Economists warn of risk of double dip following poor growth figures: //bit.ly/gswBRV reports & all this whilst the Rich get Richer?????

  6. WestMonster

    RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures: //bit.ly/gswBRV reports @clairee_french

  7. Bored London Gurl

    Economists warn of risk of double dip recession //bit.ly/dPdQvr via @leftfootfwd. Also pic of Osborne is priceless. #falseeconomy

  8. Laughing Gravy

    In which year did Prof Blanchflower win his Nobel Prize for Economics?

  9. Broken OfBritain

    RT @boredlondongurl: Economists warn of risk of double dip recession //bit.ly/dPdQvr via @leftfootfwd. Also pic of Osborne is price …

  10. Éoin Clarke

    Given that we are 25 days into Quarter 1, we will need a significant turnaround in Februrary and March to avoid a double dip.

    1. Captial Expenditure has dried up.
    2. December’s retail was -3% year on year [worse on record]
    3. VAT tightens spending…
    4. RPI inflation nears 6% by the month end..

    5. Housing market is still declining
    6. December salaries are paid early so people have quite likely been strapped for cash for a number of days if not weeks, hardly conducive to growth…

    A double dip is a foregone conclusion.

  11. StephenH

    Wow go Blanchflower…Spurs double winning captain and A Nobel prize winner!

  12. 13eastie

    Labour are clearly delighted by the provisional growth figures. But why?

    In the year prior to the election, Labour borrowed £170bn and printed another £200bn.

    “Investing” 20% of GDP, either on the (our children’s) never-never or else stolen from our parents, bought a 1% increase in economic activity (GDP back to approx. 2005 levels) and, thankfully, failed signally to change the election outcome.

    As “investments” go, this one produced a miserable return, didn’t it?

    What Labour managed to achieve with other people’s money is not frankly much to crow about.

    Top marks for Balls-led deficit denial and the ludicrous attempt to blame Q4 contraction on taxes and cuts that hadn’t yet been implemented, but you forgot to say “Conservative-led coalition cuts”… Mr Baldwin won’t be pleased…

  13. matthew fox

    Is ” Recession Denial ” back in fashion.

    Osborne is one quarter of negative growth away from a recession.

  14. Pat Raven

    RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures //bit.ly/gB40DG

  15. Kevin Richards

    OMG we're heading for a double dip RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures //bit.ly/gB40DG

  16. Mr. Sensible

    I find it telling that the CBI is effectively accusing the government of having no growth strategy.

    Little wonder given that, as well as slashing spending there is no growth strategy.

  17. blogs of the world

    Economists have warned of the increased likelihood of a double dip recession following the… //reduce.li/ohrvyj #following

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