Figures which will be released this week are predicted to put new pressure on the chancellor to figure out a new plan to prevent the UK from slipping back into recession.
On Tuesday, figures from the second quarter GDP will be published and many economists believe they will show a standstill in the economy. The business secretary Vince Cable is expected to suggest a cash injection from the Bank of England. The stall in the economy is due to low consumer demand, a reduction in loans from the banks and of course the eurzone crisis. However, Alan Clarke, a UK economist believes that the fall in the GDP is a result of the Easter bank holidays and the Royal Wedding, he hopes however that we will “get a robust third quarter” he argues that if that fails “we have no excuses.”
The current prediction for the second quarter GDP figures is that they will show a growth of only 0.1% in the economy at best between April and June. The government’s economic strategy is based on the assumption that there would be a 0.4% increase however. The Treasury has stated that the economic recovery from the recession has been destabilized by unexpected strains such as the eurozone crisis, the Japanese earthquake and the rising cost of commodities. The Treasury has said “one lesson from the eurozone is the importance of each country putting it’s own house in order. By taking difficult decisions on the deficit, Britain has gained credibility.”
Although this second Greek bailout was made with the aim of avoiding a default, regulators are apparently now trying to force banks to declare their losses. Banks across Europe are predicted to have a combined loss of E6Bn.
Let’s hope the second quarter figures prompt the chancellor to commence Plan B to get the UK’s economy back on track.
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