The BCC is the latest organisation to predict near zero growth in the second quarter of 2011. They predict today that the economy grew by just 0.3% since April.
The British Chamber of Commerce is the latest organisation to predict near zero growth in the second quarter of 2011. They predict today that the economy grew by just 0.3 per cent from April to June.
Their announcement follows reports in the Sunday Times that the economy has, in fact, shrunk in the latest quarter. The paper reported yesterday that:
“Britain’s economy may have shrunk by as much as 0.2% over the past three months, raising fresh concerns about the impact of the government’s tax rises and spending cuts. Economists tore up their growth forecasts on Friday afternoon in the wake of disappointing figures for manufacturing and construction.
“Citigroup, one of the world’s biggest banks, and Scotia Capital expect the Office for National Statistics will report GDP growth of -0.2% in the second quarter. JP Morgan predicts that GDP remained flat over the period… Barclays believes there was growth of just 0.2%, while Royal Bank of Scotland suggests that the official figure released on July 26 will be as weak as 0.1%.
On Thursday, the independent think tank, NIESR, predicted that growth would be just 0.1 per cent. If this was to materialise it would mean that growth for 2011 – using the Office for Budget Responsibility’s existing, and almost certainly optimistic predictions for Q3 growth – would be just 1.1 per cent. In June 2010, they predicted growth of 2.6 per cent.
The impact is likely to be higher borrowing than predicted by the OBR. The Sunday Times highlighted predictions from the Centre for Economics and Business Research that slower growth will mean that the deficit will be £25 billion higher in 2015 than expected by the OBR.
Responding to the latest news from the British Chamber of Commerce, Labour’s shadow chief secretary to the Treasury, Angela Eagle MP, said:
“After the global recession every major country needs to take difficult decisions on tax and spending cuts to get their deficits down. But we need a balanced deficit plan that puts jobs and growth first, because getting the economy moving and getting people off the dole and into work is the best way to get the deficit down. That’s why Labour has said the government should temporarily reverse its VAT rise to give the economy the jump start it urgently needs and repeat the bank bonus tax to build thousands of new homes, get young people into work and support small businesses.”
The OBR publishes its fiscal sustainability report on July 13th. The official estimates of Q2 growth follow on July 29th.Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.