G20 implications on the UK’s economic recovery
30th June 2010 in News
The UK went into the G20 having ticked all the right boxes with its “unpopular but unavoidable” Emergency Budget. The measures, which included the deepest spending cuts since the 1920s, have shaken the bond markets off Britain’s back with spending cuts of £113bn, tax rises of £29bn which will have the deficit crisis sorted by 2014.
The markets applauded the coalition Government’s measures to attack the £155bn deficit, Sterling rose, and gilt yields fell. The Government could not have asked for a better response than a renewed faith in both the currency and government debt especially with memories of the Greek crisis so fresh in the mind. As yields fall, debt servicing gets cheaper, and under the Government’s plans to cut the national debt, taxpayers will save £3bn on the annual interest bill due to the lower borrowing costs from the market.
However, a sustained global recovery is vital for the UK to have any chance of success in meeting its economic challenges. Therefore for our trade to grow requires other markets to grow and foreign consumers to buy UK goods. The Office for Budget Responsibility (OBR), the Chancellor’s new independent economic forecaster, expects trade to be the biggest single contributor to UK economic growth next year. Read More