Chancellor under fire as growth slows
The Conservatives have seized on a new report signalling slowing economic growth as evidence that the chancellor’s forecasting is significantly off target.
Figures from the National Institute of Economic and Social Research (NIESR) suggest the UK economy grew at 0.4 per cent during October.
This would leave the economy on course for its slowest expansion since 1992, with the think tank predicting full-year GDP growth to be 1.7 per cent – a significant drop from the 3.2 per cent growth in 2004.
Gordon Brown originally predicted economic growth of between three and 3.5 per cent, but in September he admitted that growth was unlikely to meet his forecasts, pointing to higher than expected oil prices.
Shadow chancellor George Osborne said that today’s report was further evidence that Mr Brown’s growth predictions would not be met.
“Economic growth in the UK is falling. We are growing more slowly than the average for our competitors,” he said.
“That’s why we need simpler and lower taxes, lighter regulation and genuine public service reform to boost the UK’s competitiveness. But the chancellor is still stuck in the thinking of the past.”
Yesterday, the CBI said the government needed to cut spending and close a £10 billion black hole in the public finances to boost economic growth.
However, the Treasury has previously insisted that all of the government’s spending plans are fully affordable.
Mr Brown is set to provide an economic update on his plans with the pre-Budget report, due at the end of this month.
The NIESR report also suggests that interest rates would begin to rise again, saying: “Although growth remains low [we are] of the view that an interest rate cut is inappropriate and that in the medium run interest rates are more likely to rise than fall.”
The Bank of England’s rate-setting monetary policy committee is set to announce its latest interest rate decision on Thursday.
