Peter Hoskin

The double dip predictions

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Hark, there seems to be a lot of noise about a double dip recession at the moment – added to, yesterday, by Dr Martin Weale of the Bank of England. So I thought I'd collect some of the more recent, more prominent warnings and predictions for posterity's sake. Do let me know (either in the comments or on phoskin @ spectator.co.uk) if there are any that are worth adding:

Sir Alan Budd,
16 August

Sir Alan was asked on BBC Radio 4's Today programme whether he believed Britain would avoid slipping back into negative growth. "I'm not confident of it," he said. "Our fan charts show that it is a possibility, just as much stronger growth is a possibility. It's not the most likely outcome. The most likely outcome is that the economy will continue to grow, but you cannot rule it out."

Vince Cable (and the government), 9 August

The risk of a double-dip recession remains, he acknowledges, very real -- perhaps a little more so in his mind than the Treasury's. "As I recall," he says, "the government's own forecasting risk puts it at something like one in four, one in five." But asked for his own estimate, he says, "Well, you know, certainly well below 50-50," which sounds somewhat higher than one in five.

Ken Clarke, 26 June

"If we didn't do it (deficit reduction), my judgement is that interest rates would soar and if you want to stop recovery, if you want to make double-dip recession certain, and it's quite possible still, let British interest rates go up."

Geoffrey Dicks, Office for Budget Responsibility, 12 July

Mr Dicks said: ‘There are some budget measures which will have reduced demand.

‘We’ve taken half a percentage point off GDP. The near-term outlook for GDP is not as good as it was before the Budget.

'I still don’t think that will mean a double-dip, but logically the chances of that happening have increased.’

Andrew Lilico, Chief Economist of Policy Exchange, 23 August

Double dips are not uncommon, and I expect there to be one this time.  Chris Huhne suggested recently that double dip recessions are rare and that talk of one occurring this time are Labour scaremongering.  I’m afraid he is certainly wrong on the first; whether I am a Labour scaremonger I shall leave to others to judge.

Dr Martin Weale, The Bank of England,
23 August (£)

Asked if there was a danger of a second economic downturn, Dr Weale said that it was a “real risk”. He added: “People would be foolish to say that it can’t happen or that it is definitely not going to happen.”

Deloitte survey of 125 finance chiefs, 5 July

The probability assigned to a double dip rose to 38 per cent, up from 33 per cent three months ago, in a survey of chief financial officers by Deloitte, the professional services firm.

Treasury Select Committee,
20 July

The Treasury Select Committee of MPs said that the Budget had caused “a slight increase” in the chance of the UK economy contracting again over the next year or so.

However, in the longer term, the Coalition’s plans to reduce the Government deficit will make it more likely the economy will grow strongly, the committee said.