News

UK recovery from recession “still in doubt”, says Durham economics expert

(26 January 2010)

Tony Cleaver, Senior Teaching Fellow in Economics

The UK’s recovery from recession is still in doubt despite figures showing a slight growth in the country’s economy, a Durham University expert has said.

GDP grew by 0.1 per cent in the last three months of 2009 after the economy had contracted in the previous six quarters.

Tony Cleaver, Senior Teaching Fellow in Economics at Durham Business School, said:

“Britain’s recovery from the recession is still in doubt. A growth rate of 0.1 per cent in output for last quarter can in part be attributed to companies re-building stocks but, despite the Christmas boost in trading, there is still significant weakness in consumer demand and no sign of a strong rebound.

“The most likely outlook for the year in front of us is a growth path that is flat. And so long as households are worried by debt and inclined to save, the economy will be dependent on government spending to keep it afloat.

“Whatever happens in the forthcoming general election, there is no case for an incoming administration to hoist up taxes, make savage cut-backs in the public sector and try to quickly rebalance budgets.

“That would only drive the UK down into a ‘double dip’ recession. Any incoming Chancellor had better set his sights on the long term and not be bounced by the financial markets into promising a rapid reduction in state borrowing.

“No creditor is going to get his or her money back if the economic brakes go on and incomes plunge again. And there is no point in putting up taxes on anyone other than City bankers if people aren’t earning enough to pay them.”