The UK or the central bank will fall into recession should be a heavy hammer
the agency evaluated the retreat of the UK economy after the referendum, said before the third quarter of next year will be loss of 320000 jobs, and warned that the next 18 months the UK had a 50% increased risk of recession.
driven by the pound import prices, inflation may be more than 3% for the first time in five years at the end of 2017, at the same time, the government will need to borrow an extra 47 billion pounds in the next four years.
according to the research of the NIESR, Britain's economic growth this quarter will be for the last quarter of 0. 6% to 0. 2% and stagnation in the rest of this year's time. Annual economic growth next year is expected to be 1%, but it also could be worse. Its report by a series of business surveys, one showed the economy is shrinking at the fastest pace since 2009.
NIESR said slowing from after the referendum because of fears of a trade relationship between interference and lead to a drop in business investment. It also added, the unemployment rate increases, the stagnant wage growth and uncertainty will hurt consumer spending.
NIESR studies the principal SimonKirby said: & other; We expected in the second half of this year and in 2017 the country will experience significant economic slowdown. Exist in the recent deterioration in risk upgrade, over the next 18 months the possibility of a technical recession. ”
the bank of England on Thursday ( On August 4,) Announced to back the economic uncertainty caused by the related policy, NIESR calls for monetary policy committee decided, cut and restart program ( The quantitative easing) 。
NIESR suggested the central bank on Thursday is 0. 5% of the benchmark interest rate fell to zero. 25%, and then gradually drop to zero. Government bonds by 1% and buy 200 billion pounds. It also called for the government should cut taxes and increase spending fiscal policy to support the economy.
NIESR researcher JackMeaning said: & other; If you don't make corresponding reaction fiscal policy, monetary policy makers should use a heavy hammer. If not, we expected economic downturn will not be able to fill in. ”
Kirby says the recession may be temporary or extension for policymakers to ignore uncertainty caused by the long-term stagnation. A & other; Local, long-term certainty does not return to normal levels of problem & throughout; Is a big concern for policy makers, he said.
NIESR also reminds the bank of England to be rising prices, it said the central bank governor carney may need to be in the next year, wrote a letter to the chancellor of the exchequer, explaining why inflation of more than 3% for the first time since March 2012.
the implication best central bank temporarily let rising inflation, rather than the economic downturn in disregard and adventure.
with the deputy governor of the bank AndyHaldane speech, he said last month that decision makers should be considered in support of economic confidence, interest rate cuts or other policies.
competent NIESR JagjitChadha also pointed out that in the interest rate is already close to zero and economy further towards the unknown, analysis question the validity of the rate cut.
NIESR said the central bank, also can choose to buy corporate bonds or extend for UK Banks to finance in lending plan.
” An important problem that the government will issue bonds now, and use the money to develop long-term investment projects, thought under the influence of European referendum back portion of the revenue. ” Chadha said.