Wednesday, July 27, 2011

British economic growth falters again

Source: Press TV

Britain's ranking in terms of economic growth has fallen to the bottom of the international table as evidenced by the Office for National Statistics (ONS).

The ONS data shows the economy expanded by about 0.2 percent between April and June, preparing a situation for the UK to be pushed back into recession.

The gloomy figures embarrassed George Osborne, the Chancellor, who had predicted a 1.7 percent growth for the economy in 2011 in his March Budget.

The Chancellor floated the prospect of tax cuts for business at the weekend but Prime Minister David Cameron ruled out such an approach.

“There's no country, really, that can afford another fiscal stimulus,” the Prime Minister said. “They've all run out of money.

“The right step for an economy like ours is to get on top of your debt and your deficit and then make it a better place for businesses to grow and expand and employ people,” said Cameron.

Confidential documents circulating in Whitehall indicate that the so-called “growth agenda,” drawn up by the Chancellor earlier in the year, is failing to meet several detailed targets.

“The Treasury has been almost entirely focused on reducing the deficit, not promoting economic growth. Jeremy Heywood read them the Riot Act,” said a senior Whitehall source.

Vince Cable, the Business Secretary, has called for an extension of the Bank of England's quantitative easing programme, effectively printing money.

The pressure being placed by Cable and Osborne on the Bank of England to inject money into the economy in the hope of preventing a relapse into recession was condemned by the shadow chancellor, Ed Balls.

"Vince Cable should put his energy into persuading the Chancellor to change course rather than lecturing the Bank of England on how to do its job. I am sure the Business Secretary does not need reminding that he must be careful not to compromise the Bank's independence. But the more fundamental point is that monetary policy alone will not get the recovery back on track after the zero growth we have seen in the last six months. Ministers should not be passing the buck to the Bank of England when it is the government's policies that are to blame," he told The Independent.

The government is expected to blame the figures on international issues, including rising commodity and oil prices, and fears over the eurozone and America.

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