Economists call for a George Osborne U-turn on UK austerity

by liamssoft | August 16, 2012 at 11:17 pm

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Rachel Reeves, shadow chief secretary to the Treasury, said: "With a double dip recession made in Downing Street and the economy shrinking, not growing, since the spending review, it's no surprise that even economists who once backed George Osborne are now calling for action to get the economy moving.

"Unlike George Osborne and David Cameron, they can see that the evidence now points to the need for a change of course. They know that without growth we can't get the deficit down – George Osborne is already forecast to borrow £150bn more than planned."

Although the economists said they had been right two and a half years ago to urge immediate spending cuts as a way of tackling Britain's record peacetime deficit in the course of one parliament, they said the changed economic circumstances justified growth-creating measures.

Roger Bootle, managing director of Capital Economics, said: "If I were chancellor at this point, I would alter the plan, I would stop the cuts to public investment and I might even seek to increase it. Supply-side reform might be welcome but what we're talking about here is a shortage of demand. The key thing is to try and get the private sector to spend its money and that may require a bit of government spending to prime the pump."

Source: guardian.co.uk

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UK net worth rises to £6.8 trillion in 2011

Britain's resilient property market helped increase the UK's worth by 3.3% to £6.8 trillion despite the economy slipping back into recession, figures revealed today.

The Office for National Statistics (ONS) said the UK's net value increased by £224 billion in 2011, meaning that every person in Britain is now worth £110,000.

The ONS said properties were now worth more than £4 trillion across the UK, although the rise was more modest in 2011 than in previous years as property prices stagnated amid the economic uncertainty.

This slowed down the increase in Britain's net worth, while a near-40% slump in central government net worth also hit the value of the UK.

The ONS said a plunge in tax revenues hit the Government, forcing it to issue more government bonds to fund spending, which increased its liabilities and left its net worth £763 billion lower than in 2010.

Last year's figures may also have been flattered by rising inflation, which rose to 4.5% in 2011 while average weekly wages increased by just 2.4%.

The ONS said: "Despite the poor position of households and increase in government liabilities, UK total net worth increased during 2011.

"That said, price pressures were strong throughout the year according to both the Consumer Prices and Producer Price indices. Therefore despite the increase in wealth, some of this might be attributed to price increases during the period."

Source: standard.co.uk