By Thomas Penny Dec. 9 (Bloomberg) — Chancellor of the Exchequer Alistair Darling said the U.K. economy will recover from its longest recession on record next year as the government’s stimulus measures take hold. The finance minister forecast growth in 2010 to between 1 percent and 1.5 percent, the same as he estimated in March. He expects growth of about 3.5 percent in 2011 and 2012. For 2009, Darling forecasts the economy will shrink by between 4.75 percent, deeper than his March projection for a contraction between 3.75 percent and 3.25 percent. Trailing in opinion polls before an election that he must hold by June, Prime Minister Gordon Brown is balancing the need to clamp down on a record budget deficit while extending support to voters struggling in the deepest recession since 1980. “We must continue to support the economy until the recovery is established,” Darling said in a speech in Parliament in London today. “The choices are between going for growth or putting the recovery at risk. To reduce the deficit while protecting front-line services or cuts, which put these services in danger.” Darling, delivering his pre-budget statement, will announce his deficit projections later in the speech. In March he expected a shortfall of 175 billion pounds ($285 billion) in the current fiscal year, about 12 percent of gross domestic product and the most in the Group of 20 nations. Tax Plans He’s also planning to raise taxes on bonus pay earned by bankers and to maintain spending on health and education programs popular with voters, Treasury officials say. He confirmed he’d return value added tax to 17.5 percent at the end of this year from 15 percent. He also extended tax relief on empty properties, cut duties on bingo gaming and raised the basic state pension 2.5 percent from April. He also will increase disability benefits by 1.5 percent. Brown’s Labour government and David Cameron’s Conservatives both have promised measures to bonus payments in the City, London’s financial district. Where the two parties diverge is on just how quickly the government should curb the deficit. “We can’t solve the problem of the deficit straight away, but what there’s an absence of is a credible plan,” Conservative leader David Cameron said yesterday. “I don’t think anyone’s going to be impressed with a plan that doesn’t at least have some early action in it.” To contact the reporter on this story: Thomas Penny in London at tpenny@bloomberg.net
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Darling Says U.K. Economy Will Recover From Recession Next Year, Grow 1.5%
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WASHINGTON - Le nombre de nouveaux travailleurs licenciés désirant obtenir les prestations de chômage a augmenté plus que prévu la semaine dernière, après avoir baissé pendant cinq semaines consécutives. Malgré cette augmentation, les demandes ont baissé régulièrement depuis cet été, un signe que les suppressions d'emplois sont à ralentir et à l'embauche pourrait reprendre dès l'an prochain au milieu d'une reprise économique générale. Demandes initiales d'assurance chômage a augmenté de 17.000 à une 474000 corrigées des variations saisonnières, le département du Travail a annoncé jeudi. Qui a été supérieur aux attentes des analystes de 460.000 nouvelles demandes. Des réclamations ont été en partie gonflé par un bond suivant la semaine de vacances de Thanksgiving, alors que de nombreux bureaux de chômage de l'État sont fermées, un analyste du département dit. Licenciements saisonniers dans l'industrie de la construction a également joué un rôle.
New Jobless Claims Rise to 474,000 After Falling For 5 Straight Weeks
WASHINGTON — The number of newly laid-off workers seeking jobless benefits rose more than expected last week, after falling for five straight weeks.
Despite the increase, claims have fallen steadily since this summer, a sign that job cuts are slowing and hiring could pick up as soon as early next year amid a broad economic recovery.
Initial claims for unemployment insurance rose by 17,000 to a seasonally adjusted 474,000, the Labor Department said Thursday. That was above analysts’ expectations of 460,000 new claims.
Claims were partly inflated by a surge following the Thanksgiving holiday week, when many state unemployment offices are closed, a department analyst said. Seasonal layoffs in the construction industry also played a role.
Economists closely monitor initial claims, which are considered a gauge of the pace of layoffs and an indication of companies’ willingness to hire new workers.
The four-week average of claims, which smooths fluctuations, fell to 473,750, its 14th straight decline and the lowest level since September 2008.
Still, claims will have to fall to about 425,000 for several weeks to signal the economy is actually adding jobs, according to many economists.
The number of people continuing to claim benefits fell by 303,000 to 5.16 million, the lowest level since February. The total unemployment benefit rolls have fallen in 11 of the past 12 weeks.
But the so-called continuing claims do not include millions of people that have used up the regular 26 weeks of benefits typically provided by states, and are receiving extended benefits for up to 73 additional weeks, paid for by the federal government.
About 4.6 million people were receiving extended benefits in the week ended Nov. 21, the latest data available. That’s an increase of about 130,000 from the previous week, and is partly due to an extension of benefits that Congress enacted last month.
The economy grew at a 2.8 percent pace in the July-September quarter and analysts say it is likely growing at a similar pace in the current quarter. But that is much slower than the average 6 percent rate in previous economic recoveries.
As a result, most economists expect the unemployment rate to rise in coming months and remain above 9 percent through the end of next year.
Federal Reserve Chairman Ben Bernanke said Monday that he expects “modest” economic growth next year. That should help push down the nation’s unemployment rate — now at 10 percent — “but at a pace slower than we would like,” he acknowledged.
The Labor Department last week said employers shed 11,000 jobs in November, much better than economists expected and below the 111,000 lost the previous month.
GDP contracted by 2.1 per cent in real terms in the third quarter of this year, the NSO said today. GDP had contracted by 3.2 per cent in the second quarter and 1.7 per cent in the first quarter.
It said that in terms of the production approach, growth in value added was registered in electricity, gas and water supply; financial intermediation; health; other community services; public administration; real estate, renting and business activities; agriculture; mining and quarrying; education and fishing.
Drops in value added were registered in the manufacturing sector; hotels and restaurants; transport, storage and communication; wholesale and retail trade; and construction.
In terms of the expenditure approach, GDP at constant prices declined by 2.1 per cent. Total final consumption expenditure in real terms increased by 0.6 per cent. Gross fixed capital formation at constant prices went up by 2.2 per cent.
Referring to the income approach, the NSO said that the rise in GDP at current prices amounted to €3.9 million. A €15.4 million rise in gross operating surplus of enterprises was however offset by a €4.4 million decline in compensation of employees, and a €7.1 million drop in net taxation on production and imports.
Gross national income at market prices for the third quarter of the year was estimated at €1,420.5 million.
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