29 August 2008
Opposition politicians have accused Prime Minister Gordon Brown of 'reckless fiscal irresponsibility' after official figures showed economic growth at a standstill and a gloomy outlook for public finances.
Revised figures from the Office for National Statistics showed zero growth in the UK's gross domestic product in the second quarter of 2008. The figures, released last week, showed a downwards revision from a preliminary estimate of 0.2% growth.
ONS figures for July also revealed that public sector net borrowing for the financial year stood at £19.1bn — more than twice the £8.4bn at the same point in the past financial year.
Net debt at the end of July was £542.6bn, equivalent to 37.3% of GDP — a figure still perilously close to the 40% ceiling set out in the government's sustainable investment rule.
The borrowing figures were down slightly from June's level of £24.4bn — when net debt stood at 38.3% of GDP — but this followed an expected quarterly surge in receipts from corporation tax.
Liberal Democrat Treasury spokesman Vince Cable said the revised GDP figures confirmed that the economy had reached 'the point of stagnation'.
He added: 'Any further slowdown and we'll be in outright recession. All the evidence is that the economy is still slowing, dragged down by the falling housing market and sky-high food and fuel prices. This high inflation will make it very difficult for the Bank of England to cut rates in the near future.'
The gloomy outlook was reinforced by Charlie Bean, the Bank of England's deputy governor. Speaking from a global banking conference on August 25, he told the BBC the bleak economic situation would 'drag on for some considerable time'.
Shadow chancellor George Osborne said: 'These dreadful public finance figures show that borrowing is out of control, running at almost double last year's already high levels.
'Gordon Brown has failed to put aside money for a rainy day during the good years, and taxpayers will bear the price for his economic incompetence.'