Friday, May 18th, 2012
IF YOU GO DOWN to the woods today, you’re in for a big surprise, for every index that ever was economic growth in a downward spiral for certain because – there isn’t any or not much. The latest arrival at the UK bonfire, the British Chambers of Commerce [BCC] has joined the multitude of economic observers (Office of Budget Responsibility, the OECD, plus all leading economists) to unload a full bladder on the country’s prospects for growth.
Chopping up the economy to save it
The BCC is still in favour of the bonfire but it wants its picnic lunch and eat it. When do a tough fiscal policy, high inflation, depressed consumer demand and high unemployment make for good growth prospects? Never?
Scorched earth
The BCC now predicts that growth in 2011 is more likely to be 1.3% than the 1.4% it had adhered to previously. Similarly, its forecast for 2012 has been revised downward from 2.2% from 2.3% on the proviso that the Bank of England doesn’t further staunch the embers by raising interest rates.
A few boy scouts short of a sausage sizzle
At some point in a good squeeze it is always a good idea to see if the squeezed is still breathing. As yet none of those who have a vested interest in the
economy recovery – that’s all of us – have seen any signs that it is anything other than a vision borne of wishful thinking.
These things don’t happen by laissez faire magic, they require measures that stimulate rather than stymie growth. Where are they?
The answer my friend is pissing in the wind…
David Frost, director general of the BCC, said: “Although growth will be slow, the government is right to persevere with its plans to cut the deficit.” Why? So
there won’t be any growth at all in this downward spiral? Where does the BCC see growth coming from?
Inflating nation
With inflation running at 4.5% or 2.5% above the Bank of England’s target, the BCC is mindful that whilst this is not particularly desirable, it views it as a
tolerable price for not contracting the economy still further.
David Kern, the BCC chief economist, said: “Although we would prefer to see interest rates held until the fourth quarter, we believe British businesses will
be able to absorb small increases.
“But the MPC (monetary policy committee) must act with great caution and must not be too aggressive in its tightening.”
Ed Hart is wowdewow economic and political editor.
Is anyone taking such awful growth seriously? If not, why not? Comments welcome
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Tags: David Frost, downward spiral, economic observers, monetary policy, revised downward, small increases, stimulate, tolerable price, tough fiscal policy, wishful thinking
