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| Version 3 | Version 4 |
|---|---|
| UK faces slow economic recovery | UK faces slow economic recovery |
| (10 minutes later) | |
| A leading think-tank is predicting it may take another five years for income per head to return to the level it was before the recession hit in early 2008. | A leading think-tank is predicting it may take another five years for income per head to return to the level it was before the recession hit in early 2008. |
| The National Institute of Economic and Social Research (NIESR) sees total UK GDP falling 4.3% in 2009 before growing 1% in 2010 and 1.8% in 2011. | The National Institute of Economic and Social Research (NIESR) sees total UK GDP falling 4.3% in 2009 before growing 1% in 2010 and 1.8% in 2011. |
| This echoes earlier NIESR forecasts but suggests a slower rate of recovery. | This echoes earlier NIESR forecasts but suggests a slower rate of recovery. |
| Regarding debt, the organisation predicts public borrowing to reach more than £120bn over the next four years. | Regarding debt, the organisation predicts public borrowing to reach more than £120bn over the next four years. |
| The research body sees income per head - GDP per capita - taking until March 2014 to return to the level it was in the first quarter of 2008, when the recession kicked in. | The research body sees income per head - GDP per capita - taking until March 2014 to return to the level it was in the first quarter of 2008, when the recession kicked in. |
| 'Credible plan' | 'Credible plan' |
| "The introduction of a more credible plan to return the public finances to a path of fiscal sustainability remains a necessity," NIESR said. | "The introduction of a more credible plan to return the public finances to a path of fiscal sustainability remains a necessity," NIESR said. |
| If the NIESR are right in their latest forecasts for the UK economy, the first three months of 2008 will mark the high point for British living standards for some time to come Stephanie Flanders, BBC economics editor href="http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/07/the_long_and_slow_recovery_of.html">Read Stephanie's blog | |
| And assuming the government keeps to tax plans set out in the Budget, NIESR sees public borrowing hitting £165.7bn in 2009 - or 12% of GDP. | And assuming the government keeps to tax plans set out in the Budget, NIESR sees public borrowing hitting £165.7bn in 2009 - or 12% of GDP. |
| Even taking into account "more aggressive curtailing" of public sector spending, this figure would remain at £121.6bn in 2013/2014. | Even taking into account "more aggressive curtailing" of public sector spending, this figure would remain at £121.6bn in 2013/2014. |
| The research body predicts heavy cuts in spending in addition to a rise in taxes over the following four years, to mitigate the significant debt | The research body predicts heavy cuts in spending in addition to a rise in taxes over the following four years, to mitigate the significant debt |
| Recently-released data shows total outstanding government debt in the UK has hit a record £799bn, or 56.6% of UK GDP - the highest since records began in 1974. | Recently-released data shows total outstanding government debt in the UK has hit a record £799bn, or 56.6% of UK GDP - the highest since records began in 1974. |
| Lower tax receipts as the economy shrinks put new borrowing in June at £13bn, almost double the same month as a year before. | Lower tax receipts as the economy shrinks put new borrowing in June at £13bn, almost double the same month as a year before. |
| Squeeze | Squeeze |
| "With the rapid accumulation of debt under way, debt interest payments are also expected to increase as a share of GDP over the next few years" said NIESR. | "With the rapid accumulation of debt under way, debt interest payments are also expected to increase as a share of GDP over the next few years" said NIESR. |
| "This suggests that spending on goods and services by the state will have to be squeezed significantly". | "This suggests that spending on goods and services by the state will have to be squeezed significantly". |
| The think-tank sees the economy as a whole returning to the level it was in 2008's first quarter, before the downturn hit, in 2012. | The think-tank sees the economy as a whole returning to the level it was in 2008's first quarter, before the downturn hit, in 2012. |
| And like other forecasters, NIESR sees unemployment rising until mid 2011, peaking at 9.3%. | And like other forecasters, NIESR sees unemployment rising until mid 2011, peaking at 9.3%. |
| On Friday, the UK's GDP figures for the second quarter will be released. | On Friday, the UK's GDP figures for the second quarter will be released. |