Newspaper article The Evening Standard (London, England)

Economists Question Darling's Optimism

Newspaper article The Evening Standard (London, England)

Economists Question Darling's Optimism

Article excerpt


LEADING economists today questioned Alistair Darling's optimism about when Britain will begin to recover from the recession.

They said his belief that growth will come back strongly in 2010 was not widely shared and some also said they feared his borrowing figures may themselves be optimistic.

The Chancellor used the pre-Budget report to predict that the economy would shrink by 0.75 to 1.25 per cent next year but recover strongly to grow between 1.5 and two per cent in 2010.

And he predicted government borrowing would reach a peak of [pounds sterling]512 billion in 2013, meaning total borrowing of [pounds sterling]1,000 billion [pounds sterling]1 trillion over the next five years.

Cormac Marum, tax director at Grant Thornton accountants:

"The Chancellor's forecasts on growth are more optimistic than the rest of the market thinks they should be. He is definitely hoping there is going to be a quick rebound. I think that is optimistic. On borrowing, a few years ago such numbers would be unimaginable but we are in uncharted territory here."

Jonathan Loynes, Capital Economics:

"The Chancellor's figures on growth and borrowing for the next year or two are reasonable but they are optimistic beyond that. He is predicting a strong recovery from 2010 onwards but we think it could drag on much longer."

Andrew Smith, chief economist, KPMG,

"If we do indeed get away with a mild recession that the Chancellor is forecasting then his borrowing figures are reasonably OK. But the question is, are we really going to see just a few more quarters of negative growth when we are experiencing the worst financial crisis for nearly 70 years? Highly paid financiers will always look at ways of paying as little tax as possible."

David Kern, chief economist at the British Chambers of Commerce:

"We believe his forecasts are still too optimistic. Growth next year is likely to be worse than predicted and it is doubtful that positive quarterly GDP growth would start as early as mid-2009. There is a real risk that even the huge deficit figures announced today are still not sufficiently high. …

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