Budget watchdog says that economy is weak

The economy is "weak and stable", according to a key Government financial watchdog.

The comments from chairman of the Office for Budget Responsibility (OBR), Robert Chote, appear to be a reference to Prime Minister Theresa May's "strong and stable" general election slogan.

Mr Chote told The New Statesman that the UK economy was "weak and stable, rather than strong and stable".

The head of the OBR, which presents economic forecasts and comments on the Government's fiscal policy, said there was a 50/50 chance of a recession in the next five years.

He said: "There's an evens chance of a recession in any five-year period if you look back at the historical experience. We've not abolished boom and bust."

Labour's shadow chancellor John McDonnell called the comments a
Labour's shadow chancellor John McDonnell called the comments a "damning indictment" of Tory economic policy (Aaron Chown/PA)

Mr Chote gave a cautious response to increased productivity figures after the the OBR had down-graded growth expectations last autumn, saying: "These are noisy numbers, they go up and down and we've had false dawns before."

The OBR head said that while GDP had seen growth, it had fared poorly "by the standard of past recoveries."

Mr Chote also warned that austerity was having an impact on the economy, stating: "Growth's a bit weaker over the next couple of years than it is in subsequent years and that's partly because spending cuts are still intensifying."

Mr Chote pointed to infrastructure investment as a growth stimulator, and said Brexit had impacted on GDP levels in a negative way.

Labour's shadow chancellor John McDonnell expressed concern about the outlook.

He said: "This is an extremely damning indictment of the last seven years of Tory economic policy from one of the most senior economists in the country.

"It is another nail in the coffin for this Government's economic credibility when the head of the independent watchdog whose job is to monitor our public finances is admitting that the central economic policy since 2010 is harming growth.

"He further confirms that more infrastructure spending, as Labour has consistently called for, would instead help economic growth; and that the Chancellor is not doing all he can do to support our economy."

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