Looks Like The UK Economy Is Heading Downwards

03 August 2012 17:30 - Phoebe Robinson

    



Looks Like The UK Economy Is Heading Downwards

The UKs GDP is forecast to shrink 0.5% in 2012. The prediction by the National Institution of Economic and Social Research was down sharply from its zero growth forecast in May. It is one of the bleakest forecasts over the UK economy so far. Moreover the UK growth predictions for 2013 were cut as well. They were downgraded from 2% to 1.3% and said the effects of the Jubilee reduced growth this spring by 0.4%.

Official figures that were published in June show that the economy contracted by 0.7% in the second quarter of 2012 alone. The worsening of the UK economy over this past year has been, "more pronounced than even we expected", said the think tank. They also announced that The Chancellor has, "scope for a less aggressive path of fiscal tightening". They continued to say that he should think about increasing investments in key projects to boost economic growth. 
The report further criticised the government by saying that their decision to implement austerity immediately after it came to power may have cost the country a total f 16.5% in GDP growth over a decade.

"The scenarios suggest that the recession in 2012 could have been avoided had fiscal tightening measures been delayed," the report said.

"The concern today is that the Great Recession starting in 2008 and the consequent early fiscal tightening policies may lead to significant losses in output and a protracted period of high unemployment."

 

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