Recession on the way?

Is the economy headed down?

The Guardian

Johnson says lavish spending plans would work after no-deal Brexit

Boris Johnson has suggested he could maintain lavish spending promises even if a no-deal Brexit wiped out the scope for extra borrowing by instead using the £38bn "divorce settlement" payment with the EU.

Questioned at a hustings event in York on Thursday evening about his near-£5bn annual pledge of extra money for schools, which was among a series of expensive spending and tax commitments he has made, Johnson was asked if this extra cash would be delayed if the UK left without a deal.

Johnson replied, to cheers from the audience: "It may have escaped your notice, but in the event of a no-deal Brexit, we will have an additional £39bn to spend.

Read Full Article
Download Perspecs

Is the UK headed for a recession?

By Joe Harker

The UK could be headed for another recession and is currently at the highest risk of one since 2007, a new report warns.

With a new prime minister and Brexit looming the prediction for the UK is one of economic hardship. Poor growth and insufficient planning as both named as reasons behind the higher risk of recession.

Are things about to get worse economically, or are we all about to be heading into the sunlit uplands of prosperity?

The Claim:

The Daily Telegraph reports that economists are warning the UK is "scarily exposed" to another recession.

With low interest rates and the government in a lot of debt there isn't much that the treasury can do to counteract an economic downturn, measures introduced over a decade ago are still in place.

This summer is going to be one of speculation over a potential recession, according to the Financial Times.

They warn that various sectors are reporting the economy is in poor health, with uncertainty over Brexit causing a lot of damage and the still undetermined nature of Britain's exit from the EU expected to hinder performance again.

It wouldn't take much for the economy to keep declining as confidence in the market and a lack of preparation would bit hard.

The Counter Claim:

However, Tory leadership hopefuls Boris Johnson and Jeremy Hunt have made a big raft of spending pledges to boost the economy of Brexit Britain.

They insist their spending plans will go ahead whether it's a no deal Brexit or they manage to get something through parliament, arguing that the £39 billion to be paid to the EU in the event of a Brexit deal would be used in the no-deal scenario.

Meanwhile, chancellor of the exchequer Philip Hammond has set aside £26.6 billion of borrowing headroom in the event of a deal which could go towards spending promises.

Even with this money it is unclear quite how the next prime minister is going to pay for all of their desires, as the spending claims of both politicians don't fully add up and certainly not in the event of a no deal Brexit.

Still, they're determined to pretend Brexit will be a good thing for the British economy and are planning on making investments to boost growth. Just fork over the money and pretend it won't be a problem later.

The Facts:

A recession is where the economy of a nation contracts for two successive quarters of the year, essentially where negative growth occurs over a six month period.

Brexit secretary Stephen Barclay said a recession in the event of a no deal Brexit couldn't be ruled out, with any form of exit from the EU poised to cause Britain economic damage but a no deal exit expected to be the worst case scenario.

The Times reports that the UK's recession risk is at the highest point since 2007. The Resolution Foundation said the cocktail of a slower global economy and and domestic uncertainty was putting the UK in danger.

Recessions in the UK cost on average a million jobs. With plenty of retail outlets already suffering or closed it could drastically affect the high street, which has never fully recovered from the economic crash in 2008.

Download Perspecs
Daily Telegraph

UK 'scarily' exposed to next major downturn, economists warn

The UK's recession-fighting tools are already almost exhausted leaving the economy ill-prepared to battle the next slump if and when it arrives, economists have warned.

Interest rates are too low to be cut significantly, while the Government is already heavily indebted from heavy borrowing in the financial crisis and the years since.

This means urgent work is needed to find tools which could be used to stimulate the economy in another crunch, said the Resolution Foundation.

Read Full Article
Download Perspecs