Is the UK in line for another recession? – the Office for Budget Responsibility believes we are. Due to the rise in consumer spending with no tax rises, it could result in disaster.
With the uncertainty of Brexit looming it is causing a rise in the likelihood of another recession occurring. The economic watchdog believes that since the government has ‘opened the spending taps’ and not introduced new taxes it is inevitable that there will be long-term problems.
With debt still historically high since the last financial crisis, the economy is more susceptible to interest and inflation rate changes.
With the Office for Budget Responsibility releasing their first report for economic risks it has identified that the budget is 2% to 3% deficit of the Gross Domestic Product (GDP) than it was just before the previous crisis.
This uncertainty makes the economy more sensitive to adjustments to interest rates and inflation rates.
Even with the Brexit divorce bill on the cards, the watchdog believes that the future of the UK’s trading arrangements will have a bigger impact on public finances and the stability of the UK’s future economy.
The watchdog believes Brexit will affect how the Government will have to deal with other risk factors that will arise due to Brexit.
It believes the Government needs to recognise the risks that will occur due to Brexit and be aware of the impact it will have on the economy and what they plan to do to ensure as little issues as possible.
The relationship and deals the UK achieve will have a massive influence on the long-term growth of the UK and its economy.
These risks and challenges that the UK and its Government face in the near future must be identified sooner rather than later to reduce the threat to the country’s debts.
The UK Government’s Position
Chancellor Philip Hammond believes that the Labour Party would not be best in putting plans in place to prevent tragedy and as a result the younger generation would be paying for it in the future.
Chancellor Hammond said that, “Under Jeremy Corbyn’s catastrophic plans, the independent Institute of Fiscal Studies (IFS) estimate the national debt would be over £100 billion higher by the end of this Parliament than under a Conservative Government- or £6,000 per working household.”
Hammond believes that the Tories are blaming Brexit for the economy failures, but really what the risk is, is Theresa May’s weak Government and that of the last seven years of Tory economic failure.