Coalition cuts under fire as figures reveal stronger UK growth
government ministers were accused yesterday of being “growth deniers” and of putting the UK’s fragile economic recovery at risk, after official figures revealed the economy grew at its fastest rate for nine years between April and June this year.
Political opponents queued up to attack Chancellor george osborne’s budget plans in the wake of an official revision from the office for national Statistics (onS) that showed the growth rate was better than expected in the second quarter of this year – up from 1.1 to 1.2 per cent.
they said the upward revision showed the government’s plans threatened the recovery.
Shadow Scottish secretary Jim murphy warned: “these figures show that the tories are taking a massive gamble with growth. george osborne’s emergency Budget was based on a big lie that the economy was worse than thought, when actually we now know the reverse was true.”
the SnP’s treasury spokesman Stewart Hosie said: “these figures underline the fragility of the economy, and raise the real threat to recovery from the coalition’s cuts agenda, which, by cutting too far and too fast, threatens to drag the country back into recession.”
But, according to the Institute of economic Affairs think-tank, the figures underlined the need for the government’s deficit reduction work to continue. mark Littlewood, its director general said: “the latest onS figures reveal the absurdity of arguing cuts will trigger a double-dip recession. Although the road to recovery will be a rocky one, the overall trend will be better the more strident the action the government takes.”
Fears remained over a slowdown in the global recovery yesterday after a sharp downgrade in Us economic growth triggered fresh market volatility.
The move came as Federal reserve chairman Ben Bernanke left the door open to further quantitative easing amid fears the Us economy could lapse back into recession.
In an address to a gathering of global policymakers at Jackson Hole, Wyoming, Bernanke described the economic outlook as “inherently uncertain” and said the economy “remains vulnerable to unexpected developments”.
Us government data showed GDP grew at an annualised rate of 1.6 per cent in the second quarter, compared with the 2.4 per cent pace estimated last month. The downgrade was mostly due to the largest surge in imports in 26 years and a slowdown in companies’ restocking of goods. It compares with a 3.7 per cent annual growth rate in the opening three months of the year.
While the second-quarter revision was better than many economists had forecast, Wall street trading was choppy yesterday, with the Dow Jones Industrial average see-sawing between positive and negative territory.
The Us economy – the world’s largest – has now grown for four straight quarters, although the annualised growth rate has averaged 2.9 per cent, compared with the 3 per cent necessary to keep unemployment in check.
samuel Tombs, an economist with Capital economics, said the GDP figures showed there was “increasing evidence that the global recovery is faltering”.
Bernanke raised the prospect of another Fed purchase of securities, most likely government debt or mortgage securities, to drive down rates on mortgages and other debt to spur more spending by americans.
Jim Murphy said Budget was ‘based on a big lie’
Ben Bernanke left open the quantitative easing option