Threat of double dip recession looms large, warns TUC

Commenting on figures published today (Tuesday) by the Office for National Statistics which show that the UK economy is estimated to have grown by 0.1 per cent in the final quarter of 2009, Midlands TUC Regional Secretary Cheryl Pidgeon said:
“The 2.5 million people currently without work will draw little comfort from the news that the UK is now officially out of recession. Unemployment will increase again, with more people continuing to face long spells out of work.
“No sectors of the economy are fully recovered and areas such as construction are still really struggling. Tough decisions lie ahead to get Britain back in full working order.”
“These figures show just how fragile the economy is. With the threat of a double dip recession looming large, it would be madness to cut public spending now."

TUC sets Chancellor three big tasks for the PBR

TUC General Secretary Brendan Barber said: “The Chancellor has three big tasks in the Pre-Budget Report (PBR).
“He must do nothing to endanger economic recovery by taking premature action on the deficit. Unemployment is still rising and the economy remains fragile.
“He must do more to help the jobless, particularly action to prevent this generation of school and college leavers being scarred for life.
“And he must show that those who brought about the crash and did so well out of the boom years will pay the price of putting it right. A windfall tax on bank bonuses should just be the start of building a fair tax system and reforming finance.
“We need a finance system that once again serves the rest of the economy, not just itself.”

Leading economists say now is not the time to cut spending

Commenting on the letter from a dozen leading economists urging the Chancellor not to undermine recovery with cuts, published in the Financial Times today (Monday), TUC General Secretary Brendan Barber said:
“This letter that shows that while politicians talk tough on public spending, our leading economists are deeply concerned about immediate spending cuts which could undermine recovery.
“Those who think the recession is over and are calling for immediate deep public spending cuts are being dangerously complacent.
“With unemployment rising, and both consumer and business confidence on a knife edge, cutting back on spending now runs the risk of sending us into a second wave of recession.”


Full text of letter


Sir, As we look forward to the Pre-Budget Report (PBR) there is inevitability a great deal of debate about the best pace and scale of reductions in the deficit and about how to balance the likely solutions of economic growth, tax and spend.
These are important concerns the Chancellor will want to address but the more immediate focus of the PBR is the financial year ahead. As economists with a variety of specialties, we urge the Chancellor to resist any temptation to start cutting public spending in 2010/11.
Despite improvement in the outlook, taking risks at this point while recovery is delicate would risk a return to recession. What progress has been made towards recovery in the UK and abroad has been, in some considerable part, due to decisions by governments to increase spending as a stimulus, to actively support labour markets and to accept higher deficits as an inevitable outcome of these measures.
To reverse this policy just when it is having an effect would be mistaken. Although, in such unusual times, it is difficult to be sure of the best actions to take, we feel that the balance of risk suggests our country should be more concerned about a likely deepening of unemployment than about possible inflationary pressure.
Reducing the deficit now through spending cuts would undermine the recovery and ultimately damage the public finances further.


Professor David Blanchflower, Dartmouth College and University of Stirling
Professor David Bell, University of Stirling
Professor William Brown, Cambridge University
Professor Paul Dolan, Imperial College, London
Professor Peter Elias, University of Warwick
Professor Robert Elliott, Aberdeen University
Professor Saul Estrin, London School of Economics
Professor Richard Freeman, Harvard University and Centre for Economic Performance, London School of Economics.
Professor Geraint Johnes, Lancaster University
Professor Robert MacCulloch, Imperial College, London
Professor Stephen Machin, University College London and Centre for Economic Performance, London School of Economics.
Professor Andrew Oswald, University of Warwick

Economy is still extremely fragile, says Midlands TUC

Commenting on growth figures released by the Office of National Statistics (ONS) today (Friday) TUC Regional Secretary Cheryl Pidgeon said: “This is now the longest recession in modern economic history. Even the co-ordinated world-wide stimulus has not been able to halt the damage done by the financial crash.

“Even if we had achieved a technical recovery today, it would not feel like a recovery to the thousands losing their jobs or afraid that they will join the dole queue in the months ahead when unemployment will continue rising. It takes more than a statistical read out and the return of big bank bonuses for a real recovery.


“These worse than expected figures should head off the growing signs of complacency. The economy is still extremely fragile. Any halt in economic stimulus – or even worse, cuts in spending in a premature effort to close the deficit – could easily send us into another downwards spiral.


“Politicians cannot now say that the recession is over so we can go back to treating the unemployed as work-shy scroungers rather than victims of the financial crash. Fighting unemployment – particularly among the young – must be national priority number one.”