Britain has a one in three chance of going back into recession before 2012 because of the government’s spending cuts, a Legal & General economist has claimed.
James Carrick said the government’s growth forecasts are too optimistic, and said the economy’s health is not as strong as many investors believe.
“The government forecasts private sector growth of over 6% per year, more than during the 80s and 90s when de-regulation was taking place,” he said.
“The sharp cuts in public spending that the government made in the recent emergency budget represent the largest fiscal tightening since the Second World War,” he added.
His prediction of a potential double-dip recession is not all gloom, however.
“The good news now is we don’t think there is a 100% chance,” he said.
“The bad news is we think there is a 33% chance.”
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