Tuesday, 1 February 2011

The Institute for Public Policy Research (IPPR) has produced a paper entitled;

"Why did growth slow in the second half of 2010?"

And they don't blame the snow! (well not entirely).

By their analysis it was...

Not a weakness in the global economy. 

Not the banks imposing tougher lending conditions. 

Not a strengthening exchange rate.

Not higher interest rates.

Higher oil and food prices played a part.

What did change dramatically during 2010 was fiscal policy.

Osborne's cuts led to a decline in consumer and business confidence

Turning confidence around now is going to prove very difficult. 

And rising inflation has also raised the spectre of an early increase in interest rates

The need for action (on growth) is all the more apparent now....

So Osborne's cuts and the lack of a plan for growth are the real resons for the drop in GDP. Unfortunately we will have to wait 'til the March budget to see how the Chancellor plans to address these matters....

No comments:

Post a Comment