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Blitz on spending may tip UK into a second downturn
Cuts in public spending mean the UK has a one in three chance of toppling back into recession, says Legal & General.
The lender suggests there is a 10% chance that annual growth will be negative in a year’s time, with it rising to 33% for 2012.
James Carrick, economist at L&G Investment Management, says: “The sharp cuts seen in the emergency Budget represent the biggest fiscal tightening since World War II.
“The government suggests this gap will be filled by the biggest ever boom in the private sector but tight lending conditions mean this is highly optimistic.”
He adds that the economy could start to contract as soon as the second half of 2011.
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