City economists poured scorn on Treasury forecasts that Britain will rapidly bounce back from its weakest one-year performance since 1945 to record a sustained period of rapid growth from 2011, according to The Guardian
Despite being forced to downgrade his growth expectations for this year to show a 3.5% drop in gross domestic product, Alistair Darling said he expected the UK to start expanding again by the end of the year and record a 1.25% expansion next year.
But the chancellor was accused of being over-optimistic in his anticipation that a mini-investment boom and the boost to exports from a weaker pound would lead to growth of 3.5% in 2011 and continue to grow at 3%-plus in the next two years.
Darling told MPs that the 1.6% contraction in the economy in the final three months of 2008 would be repeated in the first quarter of 2009.
GDP is expected to decline at an annual rate of 4% in the first half of this year but the chancellor said the recession had done little long-term damage to the economy, which would eventually return to a trend rate of growth of 2.75%. Full story...
AMERICA MUST TAKE A "substantial share" of the blame for the continuing financial crisis, US Treasury Secretary Tim Geithner admitted as he warned that the rest of the world cannot be reliant on the US for its recovery, reports The Telegraph.
Mr Geithner, commenting on America's part in the global recovery in a speech in Washington DC, said that although the world needs the US to recover quickly, the opposite is also true.
"The rest of the world needs the US economy and financial system to recover in order for it to revive," said Mr Geithner. "Just as importantly, we need the rest of the world to recover if we are to prosper again here at home."
His comments came as the IMF's World Economic Outlook forecast the US economy would contract by 2.8pc this year and witness flat growth next year. Full story...
NORTHERN ROCK, THE NATIONALISED mortgage lender, said today that it would lend up to £14 billion to Britain's homebuyers over the next two years but acknowledged that the level of its customers facing early debt repayment problems had soared, says The Times.
The Tyneside lender said that up to £5 billion of that lending could take place this year, in a potential boost to the struggling UK housing market.
Northern Rock, nationalised in February 2008 after it was forced to seek a £25 billion bailout from the Bank of England, admitted that repayment arrears of more than three months had risen sharply, from 2.92 per cent of its loan at the end of last year to 3.67 per cent at the end of March.
Turbulent conditions in the mortgage and housing markets and the economic recession will drive up provisions for loan losses and mean that Northern Rock will be "substantially loss-making" this year, the bank said. Full story...IFAonline
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