Yup, Austerity Works!

Crossposted from The Stars Hollow Gazette

Bank of England cuts UK economic growth forecasts

  • UK economic growth likely to be just 1.7% in 2011
  • Inflation likely to hit 5% in the coming months
  • Mervyn King admits outlook has darkened since last report

Graeme Wearden, guardian.co.uk

Wednesday 11 May 2011 13.43 BST

The Bank estimated that Britain will grow by around 1.7% during 2011, down from February’s forecast of 2% growth and in line with the latest forecasts from the independent Office for Budget Responsibility.

In 2012, GDP is expected to be around 2.2%, down from an earlier estimate of close to 3%. This is weaker than the OBR forecast of 2.5% growth.

On inflation, King said that higher commodity and import prices, and the increase in the standard rate of VAT, was pushing up the cost of living more rapidly than expected in February. He said that higher utility bills were likely to drive the consumer prices index (CPI) up to 5% this year. CPI, which fell back to 4% last month, was likely to remain above the 2% target until the end of 2012, the Bank predicted. Three months ago it had forecast that CPI would drop back to 2% next year.

3 comments

    • banger on May 13, 2011 at 2:18 am

    Austerity can work if that means cutting the waste–starting with going after the bloated FIRE sector and forcing them into austerity through taxes or rule writing.

    I also think that we need to stop being a consumer society and start being a human society that begins to work towards something beyond narcissism.  

    • RUKind on May 13, 2011 at 2:33 am

    Austerity for the below decks crowd and party on for the Captain’s table crowd. So what else is new?

    Meanwhile, rising commodity prices including oil will force price inflation sooner rather than later. And then the poor and middle class will suffer disproportionately for years. It will take years for income to catch up to the income/cost-of-goods ratio that exists now.

    The middle and lower classes are taking in the face all over this planet. We could use a Western Spring for the European and North Americans nations. Although I suspect American troops will have zero problem firing on American citizens ala Syria.

    Tend your gardens well.

    Shanti.

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