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CBI warning over recession cash | CBI warning over recession cash |
(about 9 hours later) | |
The government will have to borrow £100bn more than anticipated during the recession, the Confederation of British Industries (CBI) says. | The government will have to borrow £100bn more than anticipated during the recession, the Confederation of British Industries (CBI) says. |
The figure is among dire predictions it makes about the UK economy in 2009. | |
The CBI says that the economy will contract by 3.3% this year, compared with its previous forecast in November that it would shrink by 1.7%. | The CBI says that the economy will contract by 3.3% this year, compared with its previous forecast in November that it would shrink by 1.7%. |
The CBI predicts there will be 2.9 million people unemployed by the end of 2009, topping three million in 2010. | The CBI predicts there will be 2.9 million people unemployed by the end of 2009, topping three million in 2010. |
'Deep recession' | 'Deep recession' |
It adds government borrowing will be £148bn this year, well above the £118bn Chancellor Alistair Darling expects. | It adds government borrowing will be £148bn this year, well above the £118bn Chancellor Alistair Darling expects. |
The Treasury expects borrowing to fall in 2010 to £105bn, but the CBI predicts it will rise again to £168bn. | The Treasury expects borrowing to fall in 2010 to £105bn, but the CBI predicts it will rise again to £168bn. |
"Given the rapid contraction in global economic activity, and the continuing credit squeeze, we believe the UK will be mired in a deep recession for the whole of 2009, lasting six quarters in total and accompanied by a significant rise in unemployment," says CBI chief economic adviser Ian McCafferty. | "Given the rapid contraction in global economic activity, and the continuing credit squeeze, we believe the UK will be mired in a deep recession for the whole of 2009, lasting six quarters in total and accompanied by a significant rise in unemployment," says CBI chief economic adviser Ian McCafferty. |
Britain now has a serious structural deficit due to Gordon Brown's mismanagement of the public finances Jeremy Browne, Lib Dems | Britain now has a serious structural deficit due to Gordon Brown's mismanagement of the public finances Jeremy Browne, Lib Dems |
"You would have to go back a long way before you found a deficit as high as 10% of GDP. In recent years we have seen deficits of around the 3% mark as being strongly sustainable," he said. | "You would have to go back a long way before you found a deficit as high as 10% of GDP. In recent years we have seen deficits of around the 3% mark as being strongly sustainable," he said. |
People worried about losing their jobs are likely to cut back on their spending and the CBI predicts household spending will fall 2.7% this year and another 1.2% in 2010. Businesses are also expected to cut the amount of money they invest. | People worried about losing their jobs are likely to cut back on their spending and the CBI predicts household spending will fall 2.7% this year and another 1.2% in 2010. Businesses are also expected to cut the amount of money they invest. |
The CBI says it does not expect the Bank of England to cut interest rates much further than the current rate of 1% - the lowest in the bank's history. | The CBI says it does not expect the Bank of England to cut interest rates much further than the current rate of 1% - the lowest in the bank's history. |
It expects the "speed and severity of the recession" as well as the drop in energy prices and the recent VAT cut, to push inflation well below the bank's 2% target | It expects the "speed and severity of the recession" as well as the drop in energy prices and the recent VAT cut, to push inflation well below the bank's 2% target |
In spite of all the gloom, the report predicts that spending will stabilise early next year with the recovery growing through 2010. | In spite of all the gloom, the report predicts that spending will stabilise early next year with the recovery growing through 2010. |
Liberal Democrat economic spokesman Jeremy Browne said: "Alistair Darling's forecast that the economy would start to grow again in July never looked very plausible, and now looks absurd. | Liberal Democrat economic spokesman Jeremy Browne said: "Alistair Darling's forecast that the economy would start to grow again in July never looked very plausible, and now looks absurd. |
"Government borrowing inevitably rises during a recession, but Britain now has a serious structural deficit due to Gordon Brown's mismanagement of the public finances. | "Government borrowing inevitably rises during a recession, but Britain now has a serious structural deficit due to Gordon Brown's mismanagement of the public finances. |
"Instead of ineffective measures like a temporary VAT reduction, the government should be helping the economy through green infrastructure projects and permanent tax cuts for people on low and middle incomes." | "Instead of ineffective measures like a temporary VAT reduction, the government should be helping the economy through green infrastructure projects and permanent tax cuts for people on low and middle incomes." |
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