Economists warn of risk of double dip following poor growth figures

Economists have warned of the increased likelihood of a double dip recession following the announcement that the British economy retracted by 0.5 per cent in the final quarter of 2010. On the New Statesman website this morning, former MPC member Professor David Blanchflower warns that growth figures for the first quarter of 2011 could look equally negative, with the rise of VAT predicted to stump growth for a second quarter running.

George-Osborne In a controversial speech given yesterday, meanwhile, the director of the Confederation of Business Industry (CBI), Sir Richard Lambert, criticised the government’s lack of planning for economic growth. Mr Lambert, who leaves his position with the CBI on Friday, decided to leave office with a sharp critique of the coalition.

He said that whilst the government had got it right on fiscal tightening, they had:

“… taken a series of policy initiatives, apparently for political reasons, apparently careless of the damage that they might do to business and job creation.”

Whilst George Osborne lays the blame for the retraction of the economy on the spate of bad weather in December with, the ONS reports that:

“If there had been no disruption, GDP would be showing a flattish picture rather than declining by 0.5 per cent.”

Labour’s shadow chancellor, Ed Balls, claimed that Osborne’s focus on a politically lead cuts programme was to blame for the lack of growth:

“The government inherited an economy that was strengthening, with growth of 1.1% in the second quarter – thanks to decisions we took to support jobs and get the economy moving… Simply slamming on the brakes is not a credible economic policy.”

While economists analyse what these figures could mean for the British economy, the Conservative press office has taken to picking its way through Ed Balls’ Bloomberg speech in an effort to spin itself out of bad news.

On the same day as the International Monetary Fund revises its global predicted growth from 4.2 per cent to 4.4 per cent, the British economic climate looks like it’s headed for stormy waters; as Ed Balls quoted himself:

“When the facts change, I change my mind.”

Mr Osborne and the Treasury may wish to take note.

http://twitter.com/mike_wiltshire/status/29951846843949056 Mike Wiltshire

RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures: http://bit.ly/gswBRV reports @clairee_french
http://twitter.com/clairee_french/status/29951898865893376 Claire French

RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures: http://bit.ly/gswBRV reports @clairee_french
http://twitter.com/awesomealan/status/29952222645198848 Alan Crowther

RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures: http://bit.ly/gswBRV reports @clairee_french
http://twitter.com/lesa50/status/29952366321074176 lesa

RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures: http://bit.ly/gswBRV reports @clairee_french
http://twitter.com/connollykaren/status/29953148382613504 Karen Connolly

Economists warn of risk of double dip following poor growth figures: http://bit.ly/gswBRV reports & all this whilst the Rich get Richer?????
http://twitter.com/westmonsterblog/status/29958749674283008 WestMonster

RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures: http://bit.ly/gswBRV reports @clairee_french
http://twitter.com/boredlondongurl/status/29959151161446400 Bored London Gurl

Economists warn of risk of double dip recession http://bit.ly/dPdQvr via @leftfootfwd. Also pic of Osborne is priceless. #falseeconomy
Laughing Gravy

In which year did Prof Blanchflower win his Nobel Prize for Economics?
http://twitter.com/brokenofbritain/status/29960498711629824 Broken OfBritain

RT @boredlondongurl: Economists warn of risk of double dip recession http://bit.ly/dPdQvr via @leftfootfwd. Also pic of Osborne is price …
http://eoin-clarke.blogspot.com/ Éoin Clarke

Given that we are 25 days into Quarter 1, we will need a significant turnaround in Februrary and March to avoid a double dip.

1. Captial Expenditure has dried up.
2. December’s retail was -3% year on year [worse on record]
3. VAT tightens spending…
4. RPI inflation nears 6% by the month end..

5. Housing market is still declining
6. December salaries are paid early so people have quite likely been strapped for cash for a number of days if not weeks, hardly conducive to growth…

A double dip is a foregone conclusion.
StephenH

Wow go Blanchflower…Spurs double winning captain and A Nobel prize winner!
13eastie

Labour are clearly delighted by the provisional growth figures. But why?

In the year prior to the election, Labour borrowed £170bn and printed another £200bn.

“Investing” 20% of GDP, either on the (our children’s) never-never or else stolen from our parents, bought a 1% increase in economic activity (GDP back to approx. 2005 levels) and, thankfully, failed signally to change the election outcome.

As “investments” go, this one produced a miserable return, didn’t it?

What Labour managed to achieve with other people’s money is not frankly much to crow about.

Top marks for Balls-led deficit denial and the ludicrous attempt to blame Q4 contraction on taxes and cuts that hadn’t yet been implemented, but you forgot to say “Conservative-led coalition cuts”… Mr Baldwin won’t be pleased…
matthew fox

Is ” Recession Denial ” back in fashion.

Osborne is one quarter of negative growth away from a recession.
http://twitter.com/pmmrav/status/29992236049506304 Pat Raven

RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures http://bit.ly/gB40DG
http://twitter.com/cllrkrichards/status/29999135792828417 Kevin Richards

OMG we're heading for a double dip RT @leftfootfwd: Economists warn of risk of double dip following poor growth figures http://bit.ly/gB40DG
Mr. Sensible

I find it telling that the CBI is effectively accusing the government of having no growth strategy.

Little wonder given that, as well as slashing spending there is no growth strategy.
http://twitter.com/blogsoftheworld/status/30852121809125376 blogs of the world

Economists have warned of the increased likelihood of a double dip recession following the… http://reduce.li/ohrvyj #following