Connecting to LinkedIn...

Blank

Better than expected GDP growth figures make policy judgements even more difficult

Better than expected GDP growth figures make policy judgements even more difficult
    
Dr John Philpott, Chief Economic Adviser at the Chartered Institute of Personnel and Development (CIPD) comments as follows on the preliminary Q3 2010 GDP growth estimate released earlier today by the Office for National Statistics (ONS):
 
News that the UK economy grew by an estimated 0.8% in the third quarter of the year is greatly encouraging but is likely to make it even harder for the Bank of Englands Monetary Policy Committee (MPC) to decide on whether further quantitative easing (QE) is needed to offset any negative effect from the coalition governments tax and spending squeeze.
 
The estimated buoyancy in the economy helps explain why private sector job creation continued into the late summer and early autumn. But with construction the main driver of growth in the third quarter, and government and other services still a significant driver, there must be a question mark over what will happen when government cutbacks really start to bite in the coming months.
 
This latest good news on growth may well be enough to cause the MPC to postpone further QE for the time being. But with QE itself a far from certain remedy for supporting economic growth, argument surrounding the coalition governments need for a Plan B fiscal policy if things take a turn for the worse next year will not go away.

Tags:

Articles similar to

Articles similar to