Osborne has no plan for growth, say economists

UK Political Correspondent

Tuesday 1 January 2013

Economists today accuse George Osborne of having no credible plan for economic growth amid warnings the UK could suffer a "triple dip" recession this year.

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Kate Devlin UK Political Correspondent

Britain should brace itself for a "groundhog year" of more bad news on the economy, they say.

Opposition parties seized on the warnings, accusing the Tory-Liberal Democrat Coalition of pursuing "failing" policies.

In a gloomy look ahead to next year, a leading economic think tank said there was a 50-50 chance the UK would enter its third recession in six years.

Such a setback would be regarded as a significant failure for the Coalition, which has said its central aim is to solve the UK's financial problems.Issuing the warning, the Centre for Economics and Business Research (CEBR) said there were already signs the British economy had contracted in the last three months of 2012.The CEBR also predicted consumers would be hit by inflation above the UK Government's 2% target over the next year.Meanwhile, the Institute for Public Policy Research think tank (IPPR) held back from talk of another recession, but predicted there would be no growth in the economy this year. The organisation also accused the Chancellor of having no credible plan for the economy and pinning his hopes on "something just turning up". Economically, the next 12 months could see a repeat of sluggish UK growth and the crisis in the eurozone, the left-of-centre institute said. It also warned against looking to the High Street for signs of optimism, saying consumer and business spirits had been dampened by the Chancellor's talk of years of austerity. Mr Osborne announced in his Autumn Statement last month his stringent cuts programme will have to last until at least 2018. IPPR chief economist Tony Dolphin said: "Policymakers appear to have little idea how to boost growth in the economy and are left hoping that the news will get better. The risk is that 2013 could be Groundhog Year for the UK economy."The gloomy message follows a torrid year for the UK economy. Britain just about scraped out of its second recession in five years – the so-called "double dip".However, opposition parties insist overall the economy flatlined, showing no growth at all over the period. Earlier this week it emerged the Coalition would fail to meet Labour's pledge to cut the deficit in half by the end of this parliament. That promise was famously dismissed by Mr Osborne, who said it did not go far enough.His own economic plans have faced major setbacks, including the double-dip recession and the continuing eurozone crisis. Labour accuses the Coalition of harming the economy through austerity policies. It says the Treasury has "choked off" economic growth, forcing it to borrow more than originally planned. Eilidh Whiteford, SNP work and pensions spokeswoman, said the think-tank forecasts underlined the need for an independent Scotland to be in charge of its own economic levers."The alternative with a No vote is economic stagnation within the UK, years of continued austerity, and the dismantling of the welfare state," she said.Rachel Reeves, Labour's Shadow Chief Secretary to the Treasury, said 2013 would see the UK Government's unfairness exposed, as millionaires get a tax cut while ordinary people suffer. "Millions of working families will be worse off overall under this Government, even with the changes to the personal allowance, as cuts to tax credits and child benefit bite on top of the cost of higher VAT," she said. "Yet 8000 millionaires will get an average tax cut of over £107,000 in April.""There is nothing fair about making striving working families pay the price for this Government's economic failure."

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Osborne has no plan for growth, say economists

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