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UK economy will grow but debt could wipe out gains
07.09.09
The UK economy will bounce back next year but could return to recession because of ballooning debts, a leading business lobby group said today.
The British Chambers of Commerce predicted growth of 1.1% in 2010 — better than the 0.6% it forecast in June. It also said unemployment will peak above three million — not as high as the 3.2 million it previously feared.
But it warned that the recovery could prove short-lived because of rising debts which are set to top £1 trillion in the next two years.
“The upturn in the economy has probably already started and we could see a relatively strong bounce-back in the next few quarters,” said BCC chief economist David Kern.
“But sustaining the recovery will be very challenging and the risks of relapse are high.”
The BCC said the economy will shrink by 4.3% this year, more than the 3.8% slump expected in June.
BCC director David Frost called for reform of the public sector to reduce spending. “The painful but necessary reduction in government debt and borrowing, which will have to be implemented soon, should entail curbing public spending in all areas, except for vital business infrastructure expenditure,” he said.
Reader views (6)
I think Ted from London meant to write ..........until massive UK debt (Government and Consumer) is fully repaid over the next thirty to forty years.
- Peter, Monmouth UK
The recession will be far longer and much deeper because of the damage being caused by the action of the banking cartel. At a time when interest rates are at an all time low the greedy banks are still charging 18% or even more on overdrafts and credit card accounts. What a disgrace.
- Simon Ellis, London E8
Debt seems to be the economic elephant in the room.
- Andrew, Ely UK
Debt "could" wipe out gains ?
Please wake up there is no could. The debt will for certain destroy any gains. The government is hoping for growth of 1 % thats about £15 Billion, whilst the borrowing is well over £150 Billion. Its real simple
- Bill Garnsey, Gerrards Cross
The "J"economy is stating to take hold. We have reached the downward plunge as seen in the letter, now for the straight bit at the bottom before the tiny move upwards. The letter, like the economy, the stop at a stalemate as it hits a wall of debt. Nothing much will happen after that for the next 10 years or so except property prices will continue to fall. Cheap airlines will go bust and cars will rust,
- Albert Hall, hove england
Imminent across-the-board cuts in public spending will restrain any meaningful recovery until massive UK debt (Government and Consumer) is fully repaid over the next three to four years.
- Ted, London
