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|2013 'groundhog year' for economy|
|Tuesday, 01 January 2013 21:07|
AFP-Economically, 2013 could turn out to be a "groundhog year", with a repeat of the sluggish growth at home and crisis in Europe seen in 2012, a left-of-centre think tank has warned.
The Institute for Public Policy Research (IPPR) said that consumer and business spirits have been so thoroughly dampened by talk of years of austerity ahead that the economy may fail to grow again over the coming year.
The Government "still does not have a path back to growth" and appears to be pinning its hopes on "something just turning up", said IPPR chief economist Tony Dolphin in a gloomy new year message.
The Office for Budget Responsibility's forecast of 1.2% GDP growth in 2013 and 2% in 2014 appear to depend on a "very unlikely" readiness of hard-pressed households to drop the habits of the past four years and take on additional debt in order to consume more, he said.
The IPPR is calling on the Government to boost demand in the economy, pump more investment into infrastructure projects, establish a British Investment Bank and guarantee a minimum wage job in charity or local government for anyone unemployed for over a year.
Mr Dolphin said: "Policy-makers appear to have little idea how to boost growth in the economy and are left hoping that the news will get better. The risk is that 2013 could be groundhog year for the UK economy.
"The latest forecasts suggest growth in 2013 will be weak, but better than in 2012, and that unemployment will rise. The risk is that they are too optimistic about growth, but that - unlike in 2012 - they are right about unemployment."
He added: "How this plays out politically will depend to some extent on what happens to unemployment. In 2012, the double-dip recession did less damage to the credibility of Government economic policy than it might have done because employment increased and unemployment fell by more than expected. Few economists expect the Government's luck in this regard to hold (photo by Images_of_Money).
"The best way to describe the outlook for the UK economy is 'uncertain'. Unfortunately, uncertainty is not just a useful description; it is a key determinant of the outlook.
"The risk in 2013 is that all the talk of years of austerity at home and continuing crisis in Europe creates a huge amount of uncertainty, which will dampen animal spirits to such an extent that the economy fails to grow again."