Double dip recession fears grow - Economy - News - Moneyfacts

News

Double dip recession fears grow

Double dip recession fears grow

Category: Economy

Updated: 11/08/2010
First Published: 11/08/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Fears that the UK could slip back into recession have been heightened after the Bank of England downgraded its forecast for economic growth.

In its latest Quarterly Inflation Report, the Bank predicted that the economy will grow by around 2.5% in 2011, lower than the estimate of around 3.4% put forward in May's report.

Stating that 'risks to growth remain to the downside', the report said the strength of the recovery was 'likely to be tempered by the continuing fiscal consolidation and the persistence of tight credit conditions'.

The Bank also admitted that inflation could now remain above its 2% target for longer than had been previously expected.

It is thought consumer price index inflation, which stood at 3.2% in June, could stay above the Government's target until the end of next year.

The 2.5% rise in VAT coming into force in January 2011 was the main factor behind the prediction.

The forecast is bad news for savers who have battled to maintain the real value of their savings pots as interest rates have struggled to keep pace with inflation.

Better news for the economy as a whole came with the release of official figures showing a drop in the number of people unemployed.

A 49,000 fall in the amount of people out of work in the three months to June was the largest drop seen in three years.

Check out our savings best buy charts to find the savings deals which could help keep you ahead of inflation.

Find the best savings rates for you - Compare savings accounts

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Base rate remains unchanged in surprise decision

Earlier today, the Bank of England’s rate setting committee announced that it had voted decisively to keep base rate on hold at its record low of 0.5%. But what does it mean for you?

Budget 2016 – an overview

Well, George Osborne has just revealed the Budget for 2016 – his eighth so far as Chancellor – and as ever, there were some winners and losers from the whole thing. Below is a quick overview of the key points.

What does a US Fed rise mean for the UK?

The US Federal Reserve has decided to raise interest rates, and although you may not think that financial events happening in the US will have much of an impact on UK soil, you may be surprised…
 
Close