Mortgage News
Thinktank tips 50% chance of UK triple-dip recession
A leading thinktank has urged the government to take drastic steps to stimulate economic growth in the UK, as another forecast a 50/50 chance of a triple-dip recession.
In a series of predictions for the global economy in 2013, the Centre for Economics and Business Research (CEBR) said the UK will probably have negative growth in Q4 2012 and could see a weak Q1 2013 as well.
“Data from the ICAEW Grant Thornton Business Confidence Monitor and FSB Small Business Index have been encouraging enough to suppose there are cautious grounds for optimism going into 2013. So we give a 50-50 chance on a triple dip,” it said.
The CEBR added it expects inflation to remain above the Bank of England’s 2% target throughout 2013 as utility price rises feed through. There has been speculation incoming Bank governor Mark Carney will look to scrap the target, however.
The forecast comes as the British Chamber of Commerce (BCC) urged the government to make bold moves to steer Britain away from the “point of no return”.
It said the path to growth will include improving access to finance for growing companies, approval of infrastructure projects, a better system to prepare young people for the world of work, a reduction in red tape such as EU business regulation, and more support for firms branching out into overseas markets.
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The BCC’s director general John Longworth said: “Urgency, scale, and delivery are the three things that the government must think about as we enter 2013. Business wants to see bold, once-in-a-century measures to drive recovery and enable British companies to go head-to-head with competitors across the world.
“We need a clear, agreed and long-term push to improve Britain’s business environment before we reach a point of no return – leading to decades of stagnation and further decline.”
Meanwhile, ratings agencies continue to suggest the UK’s AAA credit rating is under threat. Standard & Poor’s, Moody’s and Fitch – the world’s three biggest agencies – have all put the AAA rating on ‘negative outlook’, and some economists expect to see a downgrade in 2013.