Reuters /London


“Back then, Britain was at the centre of the hurricane. This time around we are on the edge of the storm
Business Secretary Vince Cable warned that growth forecasts are likely to be slashed this week, adding to fears that the UK is tumbling towards a double dip recession, as global markets are expected to open heavily down today.
In an interview with the Sunday Times, Cable admitted that UK growth forecasts will “almost certainly” be downgraded this week, as the Bank of England’s latest quarterly inflation report is likely to confirm disappointing growth at home.
The debt crises on either side of the Atlantic, with the latest shock coming from the US credit rating downgrade, are wreaking market turmoil and stoking fears of the affluent world sliding back into recession.
In the Sunday Times interview, Cable said that Britain could fall back into a recession unless banks did more to help, but insisted that Britain was well placed to weather the global storm and rejected parallels being drawn to the financial crisis of 2008.
“Back then, Britain was at the centre of the hurricane. This time around we are on the edge of the storm,” he said.
“The top priority now, to boost growth and jobs, and avoid a double dip, is making the banks lend again.”
Britain’s economy slammed into reverse at the end of last year and weak economic data have raised fears that GDP may have contracted again in the second quarter.
Many economists expect GDP growth over 2011 as a whole will be no better than 1%, little more than half the 1.7% forecast by the government’s fiscal watchdog in March and the 1.8% forecast by the bank in May. This was already a downgrade revision on its February forecast.
A looming downgrade is sparking fears that the government’s deficit reduction plan will be derailed, due to receiving less tax and facing a higher bill for the unemployed, the Sunday Times said.
“People’s living standards have been quite badly hit. That is only going to change if we get sustainable growth. It’s too difficult to say when,” added Cable.
A double dip recession refers to a short-lived recovery from one recession and then a new plunge back into economic contraction.