Top Economist Warns Of ‘Double Dip’ Recession
2:27pm UK, Sunday June 13, 2010
A leading economist has warned the Government’s proposed spending cuts risk plunging the UK back into recession.
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David Blanchflower, a former member of the Bank of England’s monetary policy committee, told Sky News’ Sunday Live that further investment is needed to build growth.
“I think if these plans are implemented it is nearly certain that we are going to have a double dip recession,” he said.
“The issue is: where is the growth coming from in the economy?
“It is not going to come from the public sector and I see no evidence at all that private firms are investing or hiring.
“The only show in town now is the public sector. Now you remove that there is going to be no growth.
I’m happy to say we need a plan to get the deficit down but what I’m hearing is going to crush the public sector
David Blanchflower
“We need a plan for growth, we shouldn’t be slicing now”.
But former Chancellor Lord Lamont told the programme the UK needed to heed the warnings from other countries and begin reducing its deficit.
“We have seen in Europe how other countries have been threatened by the consequences of the Greek crisis,” he said.
“We should not imagine we are immune from that. “Our level of borrowing proportionately is not that dissimilar to Greece.”
Professor Blanchflower described the comparison with Greece as “nonsense” and claimed that Lord Lamont was “talking down the economy”.
Mr Darling claims the PM has been deliberately speaking down the economy
“I’m happy to say we need a plan to get the deficit down but what I’m hearing is we are going to crush the public sector,” he said.
“The logic has to be where are the jobs going to come from in the private sector?”
David Cameron’s new Office of Budget Responsibility will publish an updated borrowing forecast on Monday, which is widely expected to be better than previously thought.
Alistair Darling has stated he will demand a “very huge apology” from the Prime Minister for misleading the electorate about the say of Britain’s finances if this proves the case.
The former Chancellor has accused Mr Cameron of deliberately exaggerating the problems to justify his plans to raise taxes and implement big cuts.
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