UK growth down as IMF warn deficit reduction should not be at the expense of growth

The UK economy barely grew in the second quarter of 2011, GDP up just 0.1 per cent, as the IMF said deficit reduction should not be at the expense of growth.

The UK economy barely grew in the second quarter of 2011, GDP rising just 0.1 per cent – down from its initial 0.2% estimate.

The timing could not have been worse for the government, the depressing figures emerging in the run up to David Cameron’s speech to the Conservative party conference this afternoon, in which he will signal no change in the coalition line, insisting:

“Our plan is the right one and our plan will work.”

Responding to the grim news in the UK and the eurozone – Italy’s credit rating was cut by Moody’s overnight – the IMF said a stimulus was needed, that a eurozone solution is “overdue”, and warned governments against pursuing deficit reduction at the expense of growth.

The IMF say:

“The pursuit of nominal deficit targets should not come at the expense of risking a widespread contraction in economic activity… finding a durable solution to the euro area sovereign crisis has become more than overdue.”

On the UK economy, the headline figures (pdf) from the ONS show:

• UK gross domestic product (GDP) in volume terms increased by 0.1 per cent in the second quarter of 2011;

• Output of the production industries fell by 1.2 per cent, within which manufacturing rose by 0.2 per cent;

• Output of the service and construction industries increased by 0.2 per cent and 1.1 per cent respectively;

• Household final consumption expenditure decreased by 0.8 per cent in volume terms in the latest quarter;

• In current price terms, compensation of employees increased by 0.4 per cent in 2011 quarter two.

And to further dampen the mood, the IMF also warned a global recession in 2012 “can’t be ruled out”, citing the possibility “activity will turn downwards”.

See also:

Barroso joins the international push for Plan BAlex Hern, September 28th 2011

Without growth will we even halve the deficit?Cormac Hollingsworth, September 20th 2011

IMF: Cutting the deficit too fast causes higher unemploymentTony Dolphin, September 19th 2011

New IMF boss joins calls for Plan BWill Straw, August 16th 2011

IMF backs Osborne – but warns of risks aheadTony Dolphin, June 6th 2011

23 Responses to “UK growth down as IMF warn deficit reduction should not be at the expense of growth”

  1. Tracy Young

    UK growth down as IMF warn deficit reduction should not be at the expense of growth: http://t.co/SJKaAX1T by @ShamikDas #CPC11

  2. Melissa Higgs

    What was that IMF…? Debt reduction should not be at expense of growth? http://t.co/H4k1hrI9 by @ShamikDas #CPC11

  3. Kathleen Kelly

    RT @leftfootfwd UK growth down: IMF warn deficit reduction should not be at the expense of growth: http://t.co/5iM9R7ZB by @ShamikDas #CPC11

  4. Michael

    UK growth down as IMF warn deficit reduction should not be at the expense of growth l Shamik Das – http://j.mp/qMT9Vx

  5. Legal Aware

    UK growth down as IMF warn deficit reduction should not be at the expense of growth l Shamik Das – http://j.mp/qMT9Vx

  6. Sam hussain

    UK growth down as IMF warn deficit reduction should not be at the expense of growth l Shamik Das – http://j.mp/qMT9Vx

  7. alien from saturn

    UK growth down as IMF warn deficit reduction should not be at the expense of growth l Shamik Das – http://j.mp/qMT9Vx

  8. Panayotis Marneras

    UK growth down as IMF warn deficit reduction should not be at the expense of growth l Shamik Das – http://j.mp/qMT9Vx

  9. Political Planet

    UK growth down as IMF warn deficit reduction should not be at the expense of growth: The UK economy barely grew … http://t.co/z1I5Yhac

  10. Max

    UK growth down as IMF warn deficit reduction should not be at the expense of growth l Shamik Das – http://j.mp/qMT9Vx

  11. Alex Braithwaite

    RT @leftfootfwd: UK growth down as IMF warn deficit reduction should not be at the expense of growth http://t.co/EBOFcjdJ

  12. Ben Cooper

    UK growth down as IMF warn deficit reduction should not be at the expense of growth http://t.co/ik3aZFz6 via @zite

  13. Julian

    These figures come as no surprise. They have been attributed to low consumer spending. We have too many extremities in our economy that need to be adjusted in line with our current economic situation. VAT at 20% is hurting the economy badly. The high cost of fuel can also be blamed for hitting consumers where it hurts and hurting growth. Lowering both of these significantly would bring an instant boost to the real economy. One assumes that Osborne is holding off on things like this until it’s closer to election time, the problem being that our economy is laying on the floor bleeding to death now… and needs more urgent attention than he is giving.

  14. Alex Hern

    "The French and the German economies have slowed to a standstill"
    Not just France and Germany, Dave…
    http://t.co/vEeqmrVi

  15. Suzanne Richards

    er, Dave, its not just France and Germany whose economy has ground to a stand still http://t.co/ZdbdATtL #cpc11 #con11

  16. Ray_North

    What with Theresa May’s cat and David Cameron telling us to ‘pay off our credit cards’ this year the Tories have decided to dedicate their party conference not just to coming across as heartless, greedy bastards, but as profoundly stupid as well.
    Follow the link to hear our resident economist explain how David Cameron’s economics is utterly mindless:

    http://www.allthatsleft.co.uk/2011/10/conservative-conference-special-david-cameron-is-an-idiot/

  17. oh, darling.

    er, Dave, its not just France and Germany whose economy has ground to a stand still http://t.co/ZdbdATtL #cpc11 #con11

  18. Osborne: Speaking truth to wealth and power? Really? | Left Foot Forward

    […] also: • UK growth down as IMF warn deficit reduction should not be at the expense of growth – Shamik Das, October 5th […]

  19. Anon E Mouse

    Ray_North – I’d have thought that the Labour Party would have had a better conference if it had been used to get a new leader.

    All people like you are doing is giving the government an easy ride.

    Think more Charles Clarke and John Reid and less Gordon Brown and Ed Balls and Labour may stop tanking in the polls….

  20. HEATHER WAKEFIELD

    UK growth down as IMF warn deficit reduction should not be at the expense of growth | Left Foot Forward http://t.co/Tgmnd9CW via @addthis

  21. Cameron’s central argument on debt is wrong; Labour needs to find a way to say so | Left Foot Forward

    […] was due to speak, the Office for National Statistics confirmed that, unfortunately, the economy is getting weaker. The Conservatives are increasingly vulnerable on the economy […]

  22. London IWW

    UK growth down as IMF warn deficit reduction should not be at the expense of growth http://t.co/Vh1m2LUg | #UKeconomy

  23. Inflation report is bad news for Osborne’s targets | Left Foot Forward

    […] UK growth down as IMF warn deficit reduction should not be at the expense of growth – Shamik Das, October 5th […]

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