UK to Avoid Recession

According to the recent report from the British Chambers of Commerce (BCC), the UK will avoid a recession this year, and the Bank of England will not need to inject any more stimulus. It stated though, that the economic recovery is expected to be weak, and the government should concentrate its efforts to boost growth.

The weak growth is already expected in the second quarter of this year, and GDP contraction is unlikely, said the BCC chief economist David Kern.

The BCC also raised doubts about the effectiveness of quantitative easing commenting on The Bank of England’s 50 billion pounds stimulus injected into the economy last month. It did not expect an expansion of the programme.

Instead of expansion of the quantitative easing, the BCC suggested reutilizing cash from lower-than-expected borrowing this fiscal year to stimulate growth by investing in a number of measures from removing a planned rise in local taxes on firms, to easing the regulatory burden on businesses.

It is expected that government borrowing will be around 8 billion pounds lower than its target of 127 billion in 2011/12. That amount could be used to help businesses invest and create jobs without harming its debt-cutting credentials.

According to the BCC, the critical priority is to sustain growth while cutting the deficit.

Source: Reuters

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