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Published byLoren Williams Modified over 9 years ago
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The UK Economy in 2011-12 Bumping along…. Dennis Turner Chief Economist, HSBC Bank plc
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THE RECESSION IS OVER
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A deep recession
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ALL THE LEVERS PULLED
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Fiscal policy loosened
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Government finances already in deficit
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…and then deteriorated rapidly March 2010 Budget Report
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Interest rates fall to historic lows
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Lowest interest rates for over 300 years
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And sterling plummeted
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Sterling takes a pounding
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A slow recovery is underway Forecast
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RISKS
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Consumers were the driving force
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But underpinned by borrowing
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Consumers are not borrowing
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But real earnings squeezed
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A slower recovery than the last recession
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c) Public sector spending cuts
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So net debt (as a % of GDP) soared Sustainable Investment Rule March 2010 Budget
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Govt receipts and spending (% of GDP)
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Budget to be balanced in four years Surplus on current budget:
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Debt burden to peak in three years time Public sector net debt:
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d) Slow growth in key export markets
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In the wrong places Share of UK exports (goods & services):
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Euro Area growth forecast Euro Area Annual GDP growth:
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Euro deficits add to the uncertainty Annual deficit as % of GDP: Tier 3 countriesTier 2 countries
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SHORT-TERM OUTLOOK
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Slow fragile growth Forecast
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Inflation – above target Forecast Target Range
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Taxes boosting inflation Target Range
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Inflation – likely to ease Forecast Target Range
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And interest rates to stay low for now Forecast
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THANK YOU
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