Duncan Weldon
The new round-up of independent economic forecasts have been published by the Treasury.
The two charts below show the average independent forecast for GDP growth in 2012 and the average independent forecast for claimant count unemployment in Q4 2012 as they have been over the past year.
Just six months ago the economy was expected to grow by 2.1% next year; the new forecast is just 0.6% – a staggering downgrade in such a short time. Over the same time period independent forecasters have revised up their estimate of the number of the claimant count by over 200,000.
What does this huge growth downgrade mean for the deficit?
Slower growth and higher unemployment means bringing down the deficit is much harder and as a result forecasters have revised their estimate of next year’s deficit by around £20bn.
These new forecasts certainly won’t make for happy Christmas reading in the Treasury.
Comment made by jonathan on Dec 22nd 2011 at 3:31 am:
I assume you’ve seen Olivier Blanchard’s post in which he says the IMF is finding austerity hurts government bond yields.
Trackback made by The collapsing intellectual case for the government’s economic strategy | ToUChstone blog: A public policy blog from the TUC on Dec 22nd 2011 at 11:15 am:
[...] is, I would argue, reasonably well know. As I wrote yesterday the latest independent economic forecasts show exactly this effect – growth lower, [...]
Trackback made by Miliband gets serious, Clegg is ‘petulant’ over Europe, and Morgan squirms at Leveson: round up of political blogs for 17 – 23 December | British Politics and Policy at LSE on Dec 24th 2011 at 3:22 pm:
[...] George Osborne to change policy, while Duncan Weldon at the TUC’s Touchstone Blog says that the lower growth forecasts announced by the Treasury this week means that the deficit will be even more difficult to reduce. [...]