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Britain To Avoid Double Dip But Recovery Will Be Weak, Cbi Warns

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http://www.independent.co.uk/news/business/comment/britain-to-avoid-double-dip-but-recovery-will-be-weak-cbi-warns-1999789.html

Britain is set to avoid a double-dip recession but faces a long and painful climb back to pre-downturn levels of growth because of unprecedented cuts in Government spending, the country's leading business organisation said today.

The CBI said it now expects Britain's economy to continue growing this year and next, but warned that the recovery would be "weak" and driven only by the private sector. The employers' group unveiled its latest forecasts for UK economic growth on the day that the Office of Budget Responsibility (OBR) is set to offer its prognosis for the future.

The OBR, set up by George Osborne last month, has prepared independent growth forecasts, which the Chancellor will use as he frames the emergency Budget scheduled for a week tomorrow.

The CBI said it expects the UK economy to grow at a rate of 1.3 per cent this year – which is slightly faster than the 1 per cent forecast made in March, but in line with an existing Treasury projection that sees growth at 1 to 1.5 per cent. In 2011, however, the CBI predicts the economy will grow 2.5 per cent, while the Treasury has forecast 3.25 per cent.

The OBR, headed by Sir Alan Budd a former senior Treasury civil servant and a founding member of the Bank of England's Monetary Policy Committee, is expected to revise that Treasury figure down today, almost certainly to a level much more in line with the CBI's expectations. Even these are more optimistic than the consensus opinion of independent forecasters, who predict growth of 2.2 per cent next year.

Capital Economics, the think tank, said this level of revision would mean the Government would face a sharply increased public sector borrowing requirement. If the OBR were to predict growth of 2.5 per cent next year, the Government would have to borrow £8bn more than previously expected in this financial year alone. The extra borrowing needed would rise to £21bn in the 2014-15 financial year. "As a result, the Budget will probably have to incorporate measures building to £20bn worth of tightening, if not more," said Roger Bootle, the managing director of Capital Economics. "Additional cuts will account for at least some of this, though we won't know the full gory details until the spending review is published in the autumn; but big tax rises are likely."

The CBI said it welcomes the introduction of independent forecasts from the OBR, but warned that efforts to get borrowing under control would undermine the strength of the economic recovery. Richard Lambert, the CBI's director-general, also warned that the risks facing Britain and the rest of the world are increasing.

So the CBI want more govt spending then and an unsustainable deficit.

Experts ahead of the curve.

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Guest sillybear2

So the CBI want more govt spending then and an unsustainable deficit.

Experts ahead of the curve.

Shows you how intellectually bankrupt our current economic model is when business has to rely on Big Government as one of its prized customers.

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I need to start my own think tank

anyone care to join me

Only if we can have an agenda forwarded to be reviewed by peers to prepare for a forthcoming preliminary meeting to discuss the process to make up a schedule of meetings.

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The CBI said it now expects Britain's economy to continue growing this year and next, but warned that the recovery would be "weak" and driven only by the private sector.

Is this not spinning good news to make it sound bad? A private sector led recovery is exactly what is needed and maybe slow = sustainable growth as opposed to 'boom & bust'

CBI seem to have bought into the (misnamed) Keynsian views of the Labour party

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Bill Booner is the antidote to all this "no double dip" nonsense,

This is capital L shaped depression we go here, down down down. Perhaps it might stop in a few years - best ask the Japanese.

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I need to start my own think tank

anyone care to join me

WHAT SHALL WE CALL IT? THINK AND SINK TANK? IF SO, YOU ARE FIT FOR GOVT NOW! IF YOU HAVE ANY CREDIBLE IDEAS, THEN OBVIOUSLY YOUR REPORT WILL BE SHELVED AS TOO RADICAL.

The problem is..cut the deficit enough to actually control it and we are...doomed. Don't cut it and we are.....dooomed to deflate with greek style tyriaki.

Keynesian theory does not work for any amount of debt; in fact only a small proportion of GDP. These writers never seem to mention that the more a govt borrows, the less the return in GDP growth, until you actually reach a negative return per pound or $ spent. We are reaching that point all around the world and that equals deeeeeeeafault. Now then, you can choose inflation, devaluation (unless in Eurozone) a bit of each or austerity measures or just default... and have austerity measures ...by default.

Edited by plummet expert

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Im sure one of their drones came on the TV the other day suggesting cuts were right to ensure continued low interest rates.

Are fractures appearing in this wonderful british institution?

Have liebour offered the chairman a sweeter deal to become a lord or something?

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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