UK growth shrinks as global economy shows signs of recovery

Prime Minister David Cameron, his deputy Nick Clegg and Chancellor George Osborne flew to Davos last week to network with the world’s super-rich as forecasts showed much of the global economy pulling out of recession.
Back at home, however, Britain saw growth shrink by 0.5 per cent and Bank of England governor Mervyn King confirmed what millions of households already know – that prices are rising rapidly while incomes are shrinking at a rate not seen since the 1920s.

by Bernard Purcell
Friday, January 28th, 2011

The sobering, if not downright frightening, UK statistics are in contrast to a more upbeat survey of chief executives published by PricewaterhouseCoopers – although the source of their enthusiasm is emerging markets rather than the UK or Europe.

PwC chairman Dennis Nally told news outlets: “Chief executives were nearly as confident of growth this coming year as they’ve ever been in our survey.”

And in contrast to the mood at home, the International Monetary Fund, which strongly supports the Government’s £81 billion cuts programme, said in its latest World Economic Outlook that it still expects Britain to grow by 2 per cent this year and 2.3 per cent in 2012 – faster than most eurozone states but slower than Germany, the United States or Brazil, Russia, India and China (BRIC).

Market traders and analysts will also be scrutinising discussions about Europe’s sovereign debt strategy, with Spain still considered to be vulnerable.

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About The Author

Bernard Purcell is Tribune's Chief Reporter
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