The Road to Recovery

Well, that\'s the first estimate, at least. But it doesn\'t bode well.

At around the same time we also found out that public sector net borrowing rose by around £600 million in December. Essentially, we\'re spending more than we\'re earning. The budget deficit, which the Chancellor has placed a huge emphasis on reducing, just isn\'t coming down. In fact, it\'s getting bigger.

The government\'s borrowing targets have effectively gone up in smoke.

The net result of both of these developments is that the UK\'s triple AAA credit rating is under real threat. All three of the major credit agencies — Fitch, Standard & Poor\'s and Moody\'s —are hovering, vulture-like.

Many economists expect one of them to swoop down onto the carcass in the next three months. The others, emboldened by the audacity of the first, tend to land shortly afterwards.

A downgrade, of course, makes our already huge levels of national debt even more expensive to pay, which places even more pressure on the economy. George Osborne\'s position is also looking increasingly tenuous. You admire his sticking to the task but is there an element of the band still playing as the ship goes down? Is it now time for Plan B?

This is a rather gloomy piece, I know, but there simply aren\'t that many positives. Actually, that\'s not entirely true. This week the latest services PMI was higher than most had expected, which has led some to believe that we may, just may, avoid the triple dip.

What\'s clear, for little about the economy is clear at present, is that the road to recovery is going to be long and hard. The National Institute of Economic and Social Research published a report this week predicting public debt would only start falling in 2017-2018. So dig in.