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Economy
In reply to the discussion: STOCK MARKET WATCH - Wednesday, 1 February 2012 [View all]xchrom
(108,903 posts)71. The IFS economic forecast: one silver lining, five heavy black clouds {uk}
http://www.guardian.co.uk/business/economics-blog/2012/feb/01/ifs-economic-forecast-silver-lining-black-clouds
A broken-backed economy with devastated public finances and a long, hard slog ahead. That's a brief summary of what the Institute for Fiscal Studies was saying in its "green budget", which sketches out the options for the chancellor in this year's budget and beyond.
Before looking at the bad news of which there is plenty it's worth mentioning the one or two snippets of good news. George Osborne has exercised such control over his cabinet spending colleagues that they are on course to spend £3bn less this year than the chancellor had allowed for. By 2016-17, borrowing will be £9bn lower than the projections made by the independent Office for Budget Responsibility last November. At the election, due to be held in 2015, Osborne may have a bit more wiggle-room for some vote-winning sweeteners.
The rest of the IFS report, though, is not for the faint-hearted. Concern number one relates to the enormous cost of the recession of 2008-09, which has cost £200bn in output lost for ever. Concern number two is that a second period of retrenchment is now under way, with the co-authors of the IFS report, Oxford Economics, predicting a double-dip recession in early 2012 and growth of just 0.3% for the year as a whole.
An economy that suffered as big a collapse as that in the UK would normally bounce back quickly and strongly. The dependence of the UK on debt-driven growth in the financial and housing sectors has been brutally exposed, as has the impact of high inflation in an era when wages have been depressed.
A broken-backed economy with devastated public finances and a long, hard slog ahead. That's a brief summary of what the Institute for Fiscal Studies was saying in its "green budget", which sketches out the options for the chancellor in this year's budget and beyond.
Before looking at the bad news of which there is plenty it's worth mentioning the one or two snippets of good news. George Osborne has exercised such control over his cabinet spending colleagues that they are on course to spend £3bn less this year than the chancellor had allowed for. By 2016-17, borrowing will be £9bn lower than the projections made by the independent Office for Budget Responsibility last November. At the election, due to be held in 2015, Osborne may have a bit more wiggle-room for some vote-winning sweeteners.
The rest of the IFS report, though, is not for the faint-hearted. Concern number one relates to the enormous cost of the recession of 2008-09, which has cost £200bn in output lost for ever. Concern number two is that a second period of retrenchment is now under way, with the co-authors of the IFS report, Oxford Economics, predicting a double-dip recession in early 2012 and growth of just 0.3% for the year as a whole.
An economy that suffered as big a collapse as that in the UK would normally bounce back quickly and strongly. The dependence of the UK on debt-driven growth in the financial and housing sectors has been brutally exposed, as has the impact of high inflation in an era when wages have been depressed.
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