Double Dip Recession for the UK Likely Unless Coalition Adopt a New Plan B

Middlesbrough South and East Cleveland Labour MP Tom Blenkinsop is warning today (November 7th 2011) that a double dip recession is likely in the UK unless action is taken to adopt a different economic cause.

Tom said “This isn’t me saying this, but one of the worlds leading economic forecasters. The National Institute of Economic and Social Research (NIESR) warns that without prompt action on the Eurozone crisis, there’s a 70% chance the UK will stumble back into recession.”

“NIESR has also slashed its UK 2012 growth forecast from 2% to just to 0.8%. The implications of these tiny increments are severe: the UK is facing its slowest economic recovery since the First World War.”

“This forecast is backed up today by leading accountants, BDO, whose latest Business Trends report published today which indicates that the UK economy faces a serious risk of contraction as early as the end of this year and into the coming months, primarily due to a faltering services sector.”

“BDO’s Output Index – which measures turnover expectations over the next three months – fell to 92.6 in October from 93.3 in September, its lowest level since June 2009. It is also the third consecutive month that the index has been below the critical 95.0 mark indicating on-trend growth, showing that the UK economy could already be contracting.”

“The faltering economic recovery, their report states, can be largely attributed to a slowdown in the crucial services sector, which makes up three quarters of the UK’s economic output.”

“A further cause for identified concern is the worsening situation in the labour market, where BDO’s Employment Index fell to 93.4 in October from 95.9 in September and showing that job hiring intentions in the UK are likely to remain weak.”

“What worries me about this is how our government’s inaction will hit industry and jobs on Teesside. On what we see at the moment, our coalition government could not fight its way out of a brown paper bag, let alone a recession. All they seem to be able to do is to make cut after cut to public services, not seeming to notice that public service is a big supplier of goods made on Teesside. Put simply, it would be Teesside steel that could build new hospitals, schools, roads and railways – but little chance of that given Mr Osborne’s attitude.”

“The need for such investment has been called for by Shadow Chancellor Ed Balls, and has been echoed by business leaders. With the government able to borrow long term at less than 2.5% and construction costs having reduced in recent years, there has probably never been a better time to improve the UK’s ageing transport network alone – something that would benefit the steels mills at Lackenby for one.”

“It’s time to think again and look to a Plan B.”

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