Growth figures and downgraded OECD forecasts confirm UK economy has entered a more difficult phase

Ed Balls MP, Labour’s shadow chancellor, said in response to the OECD downgrading its forecasts for UK growth in 2011 and 2012 and the ONS confirming its figures for growth in the first quarter of 2011:

“Today’s figures confirm that the economy has entered a more difficult phase.

“The OECD’s latest downgrade of its forecast for growth this year and next year is concerning. George Osborne now faces the prospect of the Office for Budget Responsibility’s growth forecast for 2011 being downgraded a fourth time. Growth of just 1.4 per cent this year compares to the independent Office for Budget Responsibility’s forecast of 2.6 per cent growth before George Osborne decided to cut further and faster.

“The figures from the ONS confirm that in the six months since George Osborne’s spending review and VAT rise the economy has flatlined. By making a political choice to cut further and faster than any other major economy this Conservative-led government has choked off the recovery when it should have been secured. And the economy has flatlined before the bulk of the spending cuts and tax rises have kicked in.

“By cutting too far and too fast the Tory-led government risks getting us into a vicious circle. Slow growth and more people out of work and on benefits will make it harder to get the deficit down. That’s why the government is now forecast to borrow £46 billion more than they were expecting last autumn and we’ve just seen record borrowing for the month of April.

“There is a better way. Labour’s balanced deficit plan would put jobs first because getting people off the dole and into work is the best way to get the deficit down. And instead of giving the banks a tax cut this year, the government should repeat the bank bonus tax to build thousands of new homes, get young people into work and support small businesses.”

ENDS

Notes for Editors

1. In its latest forecasts for the UK economy, the OECD has today downgraded its prediction for growth in 2011 (from 1.5% in March to 1.4%) and 2012 (from 2.0% in March to 1.8%). The OECD also says: “The recovery paused in end-2010 and growth is projected to remain weak in 2011.”

2. The ONS has today confirmed that the economy grew by 0.5% in the first quarter of 2011, following the 0.5% contraction in the fourth quarter of 2010. In contrast, in the second quarter of 2010 the UK economy grew by 1.1% and by 0.7% in the third quarter of 2010.

3. The Office for Budget Responsibility’s latest forecast, published following the Budget, downgraded the growth forecast for 2011 for the third time since George Osborne became Chancellor. The OBR forecast growth in 2011 would be 2.6 per cent before the June 2010 Budget under Labour’s plans, 2.3% after the June 2010 Budget, 2.1% after the spending review and 1.7% after the March 2011 Budget.

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Posted May 25th, 2011 by Ed's team

One Response to “Growth figures and downgraded OECD forecasts confirm UK economy has entered a more difficult phase”

  1. Paul says:

    Ed

    A quick suggestion – I have been an expat now for over 7 years. I feel proud to be British but quite said that financially it is so much better for me to live abroad. One method by which you could raise revenue for the UK while not effecting its economy is to apply a “passport” tax. As expats we all expect to return to the UK one day and use its services. I think it would be entirely appropriate to tax us at a reduced rate (say 10% – maybe with a large deductible) for the privilege of always being able to return. This would reduce the brain drain, raise revenue and have no negative impact on the UK economy – why don’t we do it.

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