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Weak global environment 'harming UK economy'

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Weak global environment harming UK economy

The Treasury has blamed the poor performance of the British economy on the "weak global environment".

According to a spokeswoman for the department, international pressures have "exerted a major drag" on growth in the UK.

However, she told BBC News that the economy is getting better, even though conditions remain difficult across the world.

Indeed, she pointed that out that the UK is currently enjoying record employment levels, while the budget deficit has been slashed by one-quarter within two years.

The spokeswoman also stressed that the government has taken steps to support the economy since it came into office.

For instance, she said its "innovative" Funding for Lending Scheme has helped to improve conditions in the mortgage market.

The Treasury was responding to a report from the Ernst & Young ITEM Club, which noted that while Britain has "crawled out of recession", the government should be doing better.

Peter Spencer, chief economic adviser to the group, believes a "fresh approach" to fiscal and monetary policy is needed in the UK in order to trigger sustainable growth in the long term.

"There is scope for borrowing to help fund infrastructure investment and the government could certainly do more to encourage housing investment, which is subtracting from GDP when it should be adding to it," he commented.

Mr Spencer described the economic outlook for the UK as disappointing and suggested the government follow the lead of the US Federal Reserve by implementing more innovative policies.

He said this approach in the US has helped to put its economy in a better position to withstand spending cuts and tax hikes.

The Ernst & Young ITEM Club believes the UK economy will grow by less than one per cent this year. Data from the Office for National Statistics on growth in the final quarter of 2013 is to be published later this week and is widely tipped to show that GDP contracted.

This means that if a slump is also recorded between January and March 2013, Britain will have slipped into a triple-dip recession.

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