No festive cheer for Osborne after double blow

By MIKAELA MACKINNON
Published on 22/12/2012 00:49

PRE-CHRISTMAS cheer from the beleaguered UK economy is in short supply, after more disappointing data on growth and the public finances.

Figures from the Office for National Statistics (ONS) showed the autumn rebound in the economy was not as strong as forecast – 0.9 per cent, rather than 1 per cent – while the UK government borrowed more than expected in November.

There are growing fears the UK will slump back into recession for a third time early next year, although a better-than-expected performance from the services sector gave a glimmer of hope to Chancellor George Osborne. ONS figures showed the services sector had grown by 0.1 per cent between September and October.

Scott Corfe, senior economist at the Centre for Economics and Business Research, said the economic outlook remained highly fragile and a triple-dip recession could not be ruled out.

He said: “We expect economic growth of less than 1 per cent next year, which means the Chancellor’s deficit reduction plans could come off the rails.”

Experts had predicted a fall in public sector net borrowing, but, excluding financial interventions such as bank bailouts, it was £17.5 billion in November, up £1.2bn on the same month last year.

The Office for Budget Responsibility said it was “highly uncertain” the government would meet its public sector borrowing target. There would need to be higher tax receipts and weaker spending growth to meet the forecast.