Osborne’s Budget ‘makes double-dip more likely’

An official from the government's Office of Budget Responsibility has told Parliament's Treasury select committee that George Osborne's austerity Budget has made a double-dip recession more likely.

Cuts in spending and higher taxes "logically increased the possibility of a double dip", said Geoffrey Dicks an official from the OBR, which is supposed to be an independent government tax and spending watchdog.

However, he said that the OBR's "best guess" was that the UK would not fall back into recession after a weak recovery.

Alan Clarke, chief economist at BNP Paribas, agreed growth had been weakened, but said forecasting was difficult: "It is a terribly uncertain world we live in and I'm afraid that situation has got worse."

Alan Budd, the outgoing chairman of the OBR, meanwhile, was accused of being excessively optimistic because of his department's forecasts which predict economic growth of 1.2 per cent this year and 2.3 per cent in 2011.

Budd said his predictions were in line with the consensus among economists and that there was a 40 per cent chance the actual figures would be 1 per cent higher or lower than the forecast.

Read a full report at the Guardian. ·