Economists urge caution on growth forecasts

Economists are urging caution on the impact of the coalition government's deficit reduction plans, despite upwardly revised growth forecasts from the Office for Budget Responsibility (OBR).

The OBR is expected to raise the estimate for 2010 growth today - originally made at the time of the June Budget - from 1.2% to almost 1.8%. However, 16 City economists tell the Financial Times this should not be seen as evidence the economy will be able to withstand imminent tax rises and public spending cuts. Although none of the economists expect a double-dip recession, most anticipate the rate of growth to roughly halve from that of the most recent two quarters. Colin Ellis of the British Venture Capital Association says: "I would expect support from the household sector to eas...