Magazine article Public Finance

Numbers Game

Magazine article Public Finance

Numbers Game

Article excerpt

It's not just the UK that is facing the prospect of a double-dip recession Across Europe, economies are struggling with the effects of the sovereign debt crisis and the loss of confidence that this has produced.

Italy and the Netherlands fell back into recession in the final quarter of 2011, while Germany reported negative growth of 02%. Meanwhile, of course, Greece is enduring its fifth year of recession.

Given that 40% of UK exports go to European countries, this reinforces domestic pressures. As a result, the Moody's ratings agency has put Britain onto 'negative outlook', implying a 30% chance of it losing the cherished triple-A status within 18 months.

The agency said that further economic shocks from Europe could 'put into question the government's ability to place the debt burden on a downward trajectory by fiscal year 2015-16'.

Given that net debt has now passed the £1 trillion mark, this is not an insignificant concern for Chancellor George Osborne as he contemplates his third Budget on 21 March. …

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