New U.K. Strategy Urged as Triple-Dip Recession Predicted
Chancellor of the Exchequer George Osborne was urged by businesses and his political opponents to reconsider the U.K.’s austerity strategy, as economists warned the nation could face a “triple-dip” recession.
The London-based Sunday Times newspaper reported economists’ concerns that the euro-area crisis and a possible Greek exit from the region could push the U.K. into a recession again next spring. The opposition Labour Party’s finance spokesman Ed Balls renewed his attack on Osborne, saying the chancellor’s policies are “flat-lining” economic recovery.
Osborne is facing renewed criticism after figures released last week showed Britain’s recession deepened in the second quarter, prompting questions about his economic plans and whether he should remain at the Treasury. Gross domestic product fell 0.7 percent from the first quarter, the third consecutive quarterly decline.
“If last week’s figures won’t make the government wake up and change course, then I don’t know what will,” Balls wrote in an article for the London-based Sun newspaper today. “But the longer they stick to this failing plan, the heavier the price our country will pay.”
Osborne’s Labour opponents say his fiscal plans are too harsh at a time when households and banks are weighed down by debt. Taking longer to bring the budget into balance would have paid for tax and spending measures and sustained consumer confidence, they say.
“Last week’s figures showed that over the last two years David Cameron and George Osborne have turned Britain’s recovery into a flat-lining economy and now a deep and deepening recession,” Balls wrote.
Yesterday, Osborne said he will maintain the U.K.’s austerity program even as the economy remains weak after Standard & Poor’s reaffirmed the nation’s AAA credit rating.
A YouGov Plc (YOU) poll for today’s Sunday Times newspaper put Labour at 42 percent, ahead of Cameron’s Conservatives at 33 percent. The Tories’ junior coalition partners, the Liberal Democrats, were at 9 percent, just one point ahead of UKIP, which campaigns for independence from the European Union.
The Sunday Mirror newspaper reported a call from the Confederation of British Industry, representing businesses, which wants Osborne to stimulate the economy by investing in infrastructure projects such as roads, ports and nuclear power stations.
Writing in the Mail on Sunday newspaper, James Dyson, chairman of Dyson Ltd., which manufactures vacuum cleaners, also urged Osborne to invest in infrastructure projects. “When it comes to infrastructure, we seem content with a fingers-crossed attitude,” he wrote.
The Mail on Sunday reported that Osborne is considering changing planning laws, which restrict new building, to help economic recovery, even amid opposition from heritage and environmental pressure groups. The newspaper, without identifying the source of its information, said a list of economic options is being drawn up for September.
Balls told the Independent on Sunday newspaper in an interview that he thinks Liberal Democrat Business Secretary Vince Cable, who last week said he would “probably” make a good chancellor, regards Osborne’s economic strategy as “deeply foolhardy,” adding that the Liberal Democrats are locked in a political and economic “tragedy.”
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