Spending cuts outlined in the Budget have heightened the chance of a double-dip recession, officials from the Office of Budget Responsibility (OBR) have warned.
Geoffrey Dicks, a senior member of the OBR, told the new Treasury select committee the tough public spending cuts announced by the government would hurt growth.
He explained that between the OBR’s pre-Budget and post-Budget forecasts, the office had taken 0.5% off GDP and that, “the near-term outlook for GDP is not as good as it was before the Budget.”
Dicks said of the threat of a double-dip recession: “Logically, the chances of that happening have increased.”
John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, warned a double-dip recession would present big employee engagement problems for HR managers.
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“The impact would be threefold,” he said. “It would mean reduced demand for staff in the private sector and increased redundancies; it would hit people who were kept on during the first recession and who have made sacrifices in terms of pay freezes and so on; and those people who were still left at the end of [fresh redundancies] would be more insecure and less willing to make sacrifices having trusted their employers initially.”
But Philpott added although things were going to be tough for a while, he believed a double-dip recession was a “possibility rather than a likelihood.”
