Darling’s give away is ‘too little too late’

The measures announced by the Chancellor in the Pre Budget Report will not stop the United Kingdom economy suffering its longest period of stagnation since the 1979-83 recession.

This is the key finding from the Pre-Budget reaction report published by the centre for economics and business research (cebr) – one of the country’s leading economics consultancies and respected commentators on business trends.

Charles Davis, economist at cebr, commented: ‘Despite today’s tax give-aways, the economy won’t recover to the levels we saw in the second quarter of this year until the end of 2011 — making this the longest period of recession and sluggishness since the early 1980s’ decline.’

Ben Read, managing economist at cebr, said: ‘The centre piece of today’s statement was a temporary cut in VAT from 17½ to fifteen per cent — providing a £12 billion fiscal stimulus alone.

‘But the detail shows public finances based on optimistic economic forecasts, substantial tax claw-backs post-election and a marked reduction in public expenditure growth beyond 2010.’

Mark Pragnell, cebr’s managing director, added: ‘Today was always going to be as much about politics as economics — Brown and Darling’s last throw of the dice for a favourable economy come the next general election.

‘But we think they’ve done too little too late. The fiscal stimulus is too small for them to avoid rising unemployment, growing bankruptcies and a stagnating economy come May 2010.’