View more on these topics

Invesco’s chief economist challenges Budget outlook

Invesco Perpetual chief economist John Greenwood has questioned the outlook offered by Chancellor Alistair Darling in this year’s Budget.

Greenwood says the Budget extends to the Labour government’s record of “implausibly optimistic forecasts about the outlook for the economy.”

He says the Chancellor’s GDP forecast that the UK will return to growth by the end of 2009 and continue through 2010 and 2011 implies that the deep underlying structural problems of the UK economy can be resolved and cured in the next 12 months.

“These problems include household finances that have seen debt surge to over 170 per cent of disposable income, a financial sector that remains capital-constrained and therefore unwilling to lend, and government finances that are in structural deficit even during a boom.”

Greenwood also questions the assumption that quantitative easing will be a rapid success, pointing to Japan’s inability to turn its fortunes around in a similar situation.

He says: “The combination of weak tax revenues and continued high government expenditures results in frighteningly large projected budget deficits reaching almost 12 per cent of GDP in 2010. The hard truth is that if government expenditure expands from 40 per cent of GDP to 50 per cent of GDP as proposed, the underlying growth rate must fall, undermining all these comfortable projections.

“Therefore the government’s exit strategy from high levels of borrowing is simply not credible. It seems likely that these judgements will at some point be reflected in the relative performance of the UK economy and markets.”


Budget: All bark and no bite

Last Wednesday’s Budget was billed by many in the industry as headline grabbing spin rather than sensible proposals which could help the UK out of a recession.

Variations on sacrifice

The concept of salary sacrifice, or salary exchange as it is often known now, has been around for a long time but has become increasingly common over the last few years. It involves an employer paying a pension contribution that would otherwise have been paid by an employee.


DB transfer shouldn’t be all-or-nothing

By Steve Webb, director of policy In my recent discussions with advisers, a hot topic has been the growing number of people interested in transferring their defined benefit pension rights into a defined contribution pension scheme. With many pension schemes offering eye-watering transfer values, this is likely to be an area of increasing interest. Yet […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm