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IMF: Recession will be worse than predicted
Hugo Duncan17 Mar 2009
THE recession in Britain will be longer and deeper than previously thought, the International Monetary Fund warned tonight.
It said the economy will shrink by 3.8 per cent this year and 0.2 per cent in 2010. The forecast was far worse than the prediction less than two months ago of a 2.8 per cent contraction this year followed by growth of 0.2 per cent.
The grim outlook came just a day before official figures were expected to show that in January the number of unemployed rose above two million for the first time under New Labour.
Some economists predict unemployment will hit three million this year and 3.3 million before the jobs market starts to recover.
And in a blow to Gordon Brown ahead of next month's meeting of G20 leaders in London, the IMF tonight said only Japan will suffer a worse downturn this year, with a five per cent dive, sharply down from the last forecast of a 2.6 per cent contraction. The IMF now expects the global economy to shrink by 0.6 per cent this year, compared with its January forecast of 0.5 growth.
The US economy is predicted to shrink 2.6 per cent this year, compared with a January forecast of a 1.6 per cent contraction. The Eurozone is expected to contract 3.2 per cent, down from January's forecast of a 2 per cent decline.
IMF adviser Teresa Ter-Minassian said at a conference in Lisbon: "This is a true global crisis, impacting all parts of the world and countries at different levels of development."
The IMF warning came on the day Financial Services Authority figures showed that the number of mortgage accounts in arrears shot up by 31 per cent last year.
Howard Archer, chief UK economist at Global Insight, said the housing market was in for another tough year. "We suspect that any pick-up in housing market activity will be limited for some considerable time to come and that further significant house price drops are in the offing," he said.
Reader views (11)
Yet another Labour achievement from our sub-Prime Minister and fellow partners in crime.
- David, Fleet UK, 18/03/2009 09:25
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re: Mike, London.
There are in fact somewhere near 11 million unemployed when all politically correct categories are added together. Take a look at the Office of National Statistics website.
- Joe, Thornton Heath, UK, 17/03/2009 22:02
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It will take ten years for us to recover from this...the bubble took that long to build, starting in the Eighties. We have learned nothing so far, newspapers continue to run property price stories to encourage people to get further into debt. The government is spending money like water,and do we really need to spend £50 million on a summit which is just an excuse for political jolly get together and photo op. And the banks are NOT lending. What a mess.
- Sheila, london uk, 17/03/2009 19:10
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Two or three million unemployed is meaningless put the way it is! There are millions on job seekers allowence and pension credits all these people are unemployed! Wake up, when is 5/6 million unemployed not unemployed? When Brown and his cohorts do the counting.
- Mike, London, 17/03/2009 18:46
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The IMF has got it wrong because our Dear Leader says so.
He has saved the financial world, preserved civil service and MPs pension pots and MPs generous (extra income) expenses and abolished boom and bust. The borrowing rates have been held low, but he has, to help the borrowers, required pensioners, who have savings, to help the suffering borrowers who are outnumbered by the savers by at least 6:1.
Having raided the local authorities pension pots, he is allowing the rates to increase to help the LAs to make extra contributions to repair the deficits caused, a large number of the rate payers being pensioners whose pots he has raided to assist his re-election because he cannot afford to alienate LA workers.
- Hugh, Middx, 17/03/2009 18:37
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Crash Gordon says it is the fault of "the other countries". We were better prepared.
- Jacqueline, Hampstead, London, 17/03/2009 18:32
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So now we know. The IMF is much more believable about its economic analysis than any of the bilge Blair or Brown's 'Mouthpieces' have ever been. I would trust what the IMF or World Bank says about a particular country's economic state rather than the bilge that New Labour has been spewing out for years.
It probably will be 2011 or 2012 before there is any appreciable indicators for any recovery. Mind you Mr Gordon McRuin and Friends will be long gone.
'Spin, Lies and Bull'
- Uncle Vanya, East Anglia Area UK, 17/03/2009 18:17
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Sir,
You report that the IMF adviser said "This is a true global crisis, impacting all parts of the world and countries at different levels of development." also that unemployment is likely to rise .
Surely this is not just "a blow to Gordon Brown" but to everyone in the UK? Are we now supposed to believe that the "global crisis" is the sole responsibility of one man? Did Gordon Brown 'frog march' us into the banks to take out mortages we could not afford?. Did he invent the creative accounting, hedge funds and derivatives markets?.
Surely it was the Bearnie Madoff's of the financial world that conned us out of our savings and undermined the confidence of the ordinary small investor?
I think it was Warren Buffet who said we have created "financial weapons of mass distructon". Until we purge the toxic debts out of the financial system I have little hope that banks and institutions will start lending to each other. Until that happens it will be impossible for the small business, which are the lifeblood of the economy, to borrow, invest or grow.
- Damien Vaugh, London ,UK, 17/03/2009 17:50
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The IMF are mad if they think the figures will be this good. If the world economy hasn't shrunk by 60% by this time next year I'm a monkey's uncle. No-one is buying anything and worse people are lying about how little is being spent and so the downwards spiral will continue as everyone tries to rid themselves of debt and in doing so detroys the year on year "growth" that has lead to all this destruction of the only true wealth of this planet, the natural world around us. What makes us so sure mother Nature doesn't have the economies of the world in the palm of her hand as well as your life and mine?
- John, Aberdeen, UK, 17/03/2009 17:48
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But Gordon said we were better placed to ride out this recession than all our competitors. Can the Master of the Universe be wrong? Surely not!
- Richard K, Nottingham, 17/03/2009 17:22
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So, now everyone knows we currently have the worst Government in British history. Thank you too mendacity Blair and doom & bust Brown. Let's hope a saltmine in Russia is made available to you both!
- Joe, Thornton Haeth, UK, 17/03/2009 16:44
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