Newspaper article The Evening Standard (London, England)

Still in the Economic Danger Zone

Newspaper article The Evening Standard (London, England)

Still in the Economic Danger Zone

Article excerpt

THE GROWTH figures for the last quarter of 2010 were never going to impress anyone, given that snow in December meant people stayed at home when shops were relying on them to spend most money. Nonetheless, today's preliminary Office of National Statistics estimate that the economy contracted by 0.5 per cent is news the Government did not want to hear. It followed six months of modest growth: this now looks more like a double-dip recession.

The Chancellor, George Osborne, has blamed the snow and says it is more important to stick to his guns in tackling the budget deficit. But the danger is that any prolonged contraction would hit tax revenues, wrecking the Government's deficit reduction plan. Today's news follows a rise in inflation to 3.7 per cent, well above the Bank of England's target of two per cent. This is also explicable in terms of hikes in commodity prices but the truth is that other economies, also susceptible to those increases, are not registering the same jump in inflation. …

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