UK : Double-dip recession ‘could emerge after spending cuts'

 

Equity release plans may be of interest to people concerned about their finances following the government's spending cuts.

The newly-created Office for Budget Responsibility (OBR) has published its first economic forecast, suggesting that the economy will grow 2.5 per cent in 2011.

This estimate is lower than predictions from the previous administration, which forecast that gross domestic product would increase by three per cent next year.

Ahead of the report's publication, a former member of the Bank of England's Monetary Policy Committee warned that harsh spending cuts could lead to further financial problems for the UK.

David Blanchflower told the BBC's Today programme: "I think the danger is a phrase that [US Federal Reserve chairman] Ben Bernanke used, it is called the death spiral.

"There is no evidence that the UK's Government is going to create private demand, this could push us back into double-dip recession."