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Uk Economy 'set To Shrink Faster'

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UK economy 'set to shrink faster'

By Steve Schifferes

Economics reporter, BBC News

The Organisation for Economic Cooperation and Development (OECD) has revised down its forecast for the UK economy in 2009.

It warns that the UK is in "a sharp recession" with output set to contract by 4.3% in 2009, worse than its previous forecast of a 3.7% fall.

The OECD predicts zero growth in the UK economy in 2010 and says the UK budget deficit will hit 14% of GDP next year.

Its UK forecasts are worse than those the Treasury made during the Budget.

However, a number of independent economic forecasters, including the National Institute for Social and Economic Research, have suggested that the recession is bottoming out in the UK.

On average, independent forecasts are projecting the UK economy to contract by 3.7% in 2009, close to the chancellor's forecast of -3.5%.

Borrowing worries

The OECD is particularly concerned about the size of the UK's budget deficit, saying that the "public finances have deteriorated sharply... curtailing the possibilities for additional fiscal stimulus".

It says the UK is one of four countries (the others are the Irish Republic, Spain and the US) where government borrowing will be above 10% of GDP in 2010.

The OECD warns that in the UK, rising public sector deficits will need to be reined in as recovery takes hold, and urges the government to develop a "concrete and comprehensive plan" to ensure debt is on a declining path.

It estimates that even if the UK reduces government borrowing by 1% of GDP per year for the next seven years, it will still have a gross debt-to-GDP ratio of 125% by 2017, one of the largest in the OECD.

Political row

The OECD comments have already sparked a political row.

The shadow chancellor, George Osborne, said: "The OECD figures show just how deep Labour's debt crisis is.

"The projected record budget deficit is worse than the Treasury forecast, the worst in the developed world and double what it was when Dennis Healey had to go to the IMF."

But for the government, the Chief Secretary to the Treasury, Liam Byrne, said: "Britain had the space to fight back hard against the global downturn because we had lower debt than most G7 countries before the crisis broke.

"If we invest now we can stop the recession cutting long and deep."

Why is there such a big discrepancy between forecasts made inside and outside of the UK?

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Why is there such a big discrepancy between forecasts made inside and outside of the UK?

Because Brown has bet the house on being correct. Therefore he can lean on the media here to make it look like everything is rosy. However, those pesky foreigners can see right through him and they know he's talking BS.

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Because Brown has bet the house on being correct. Therefore he can lean on the media here to make it look like everything is rosy. However, those pesky foreigners can see right through him and they know he's talking BS.

The set of initials whose views were close to the Treasury, use a model that is similar.

The headlines should have read "2 computers in getting the same answer shock".

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only if green is holding a gun aimed at Gordon.

Gives the phrase "green shoots Brown" a new twist. :)

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Because Brown has bet the house on being correct. Therefore he can lean on the media here to make it look like everything is rosy. However, those pesky foreigners can see right through him and they know he's talking BS.

Lies on top of lies. It makes us look stupid.

Brown is turning the UK into a global embarrassment. :angry:

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The year is only halfway through, both sets of predictions, the UK line and the OECD line could be proven wrong. The models used to forecast are both approximations to the economic 'reality' and so subject to distortion, depending on the assumptions made about how the economy actually works.

Ultimately the processes used to calculate GDP and most other headline statistics are flawed and have a margin of error of at least 1 per cent.

You have to ask yourself in whose interests are these reports being made, which 'facts' support which arguments.

I hope we're all aware of how we selectively use these 'facts' to bolster our own arguments, reality is usually messier and more chaotic than the versions we try to impress on each other.

In a years time we'll have a definitive tidy account of what happened, but truth be told none of us really knows how this is going to pan out.

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In a years time we'll have a definitive tidy account of what happened, but truth be told none of us really knows how this is going to pan out.

While I agree in part, to quote the late great Tony Hancock "You don't have to fall off a cliff to know it hurts".

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While I agree in part, to quote the late great Tony Hancock "You don't have to fall off a cliff to know it hurts".

Nice quote. Though to quote another Bob, " Something is happening, but you don't know what it is, do you Mr Jones".

We are all in the position of Mr Jones with regard to the future and we really have no definite handle on what's happening in the wider world. We receive information but cannot vouch for it's veracity. Who out of all the people posting on this site has actually gathered any of the data posted on it. Copy and paste merchants the lot of us.

We're all armchair experts. We think we've got an idea of what's going on but it's mostly from second or third hand sources, opinion formers, axe grinders and snake oil salesmen.

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Nice quote. Though to quote another Bob, " Something is happening, but you don't know what it is, do you Mr Jones".

We are all in the position of Mr Jones with regard to the future and we really have no definite handle on what's happening in the wider world. We receive information but cannot vouch for it's veracity. Who out of all the people posting on this site has actually gathered any of the data posted on it. Copy and paste merchants the lot of us.

We're all armchair experts. We think we've got an idea of what's going on but it's mostly from second or third hand sources, opinion formers, axe grinders and snake oil salesmen.

But that's the beauty of Economics.

And the Internet. :)

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We are all in the position of Mr Jones with regard to the future and we really have no definite handle on what's happening in the wider world. We receive information but cannot vouch for it's veracity. Who out of all the people posting on this site has actually gathered any of the data posted on it. Copy and paste merchants the lot of us.

Neither does Mervyn King by the looks of it. :lol:

Edited by MOP

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Bump this - rather puts the dampeners, nay even the reverseners on recovereh talk.

BBC must be pulling their hair out working out how to spin it.. Or more likely, report it on news24 at dawn to say they've been unbiased then RAMP a made-up report by Assetz or Kirtsy Andslap on the 6pm and 10pm news.

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Guest spp

Step back and TFH off...How the hell do they think we are going to grow our way out of this debt!??

:unsure:

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