Balls warning after IMF downgrade
Britain will pay a "heavy long-term price" if the Government does not take urgent action to boost the economy, Ed Balls has warned.
The International Monetary Fund today lowered its growth predictions for the UK economy for 2012 and 2013, citing what it calls "intense" financial pressures.
It expects the UK to grow 0.2% this year - revised down from its previous prediction of 0.8% - while 2013 should see 1.4% growth, down from a January prediction of 2%.
The Shadow Chancellor said the forecast was "yet more evidence" that the Coalition's economic plan had failed.
“David Cameron and George Osborne must now accept they need to act to get the recovery back on track. There can no longer be any excuses for delay," he said.
"We need a change of course and urgent action now to boost the British economy. If we fail to act now, and we see years of slow growth and high unemployment being entrenched, Britain will pay a heavy long term price.”
Responding to the IMF predictions, the Prime Minister's Official Spokesman said: "The euro area is the UK's largest trading partner and we are feeling the effects of what's happening in the eurozone in our economy."
There was a slightly more optimistic view from accountants Ernst & Young, who said lower energy prices and the Treasury's decision to postpone the increase in fuel duty will help inflation drop to 1.7% by the end of the year, relieving pressure on households and driving an economic "Indian summer".
However the report warns the UK will see zero growth in 2012 as a whole, as the second-half increase in GDP merely cancels out the falls in the first half.
“The boost to household finances and the subsequent pick up in spending should be enough to push the UK back into positive territory this year, but don’t expect a consumer led recovery further out," Peter Spencer, chief economic advisor to the Ernst & Young Item Club said.