Saturday, August 6, 2011

UK economists back OBR growth warning

Source: Press TV

UK senior economists have supported the warning from the OBR chair, insisting Chancellor Osborne's growth forecasts were far lower than the growth targets.

The head of the Office for Budget Responsibility, Robert Chote, said that George Osborne will likely need to revise the 1.7 percent growth forecast he predicted in March when he made his Autumn Statement.

"Back in March our central forecast was for 1.7% growth this year, which at the time was fractionally more pessimistic than the average of the outside forecasters. Since then obviously we've had weaker out-turns in the first and second quarters than most people, including us, anticipated,” Chote said.

Chote's concerns were strongly backed by Philip Rush, an economist at Nomura, and by the forecasting company IHS Global Insight that offers economic and financial analysis, forecasting, and market intelligence.

The shadow Treasury minister, David Hanson, also welcomed Chote's remarks, and criticized Osborne for accelerating the tax cuts. The Labour politician urged Osborne to recognize that his tax rises and harsh spending cuts were too far and too fast and had choked off last year's recovery.

“He has left us in a weak position if things now go wrong in the eurozone and America. We need a more balanced deficit plan that puts jobs and growth first, alongside tough decisions on tax and spending cuts.

“As the IMF and the National Institute have warned this week, continued slow growth should lead to a change of course, such as the temporary VAT cut Labour has been calling for to kick-start the stalled recovery,” Hanson said.

However, a Treasury spokesman claimed that Britain has been stable while other countries were struggling with the international weak economic conditions.

“The UK economy is growing and creating jobs. Reducing the deficit and tackling our debts is an essential prerequisite for sustained growth," he added.

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