Pressure was growing on George Osborne’s policies yesterday as the UK’s economic recovery was dismissed as ‘almost non-existent’ raising fears that Britain is on the brink of a triple-dip recession.
On Friday, Fitch became the second credit ratings agency to strip Britain of its AAA rating, citing concerns about a ‘weaker economic and fiscal outlook’.
And while most economists believe the latest GDP figures, released on Thursday, will show that the economy grew by 0.1pc in the first three months of this year – narrowly escaping a ‘triple-dip’ recession – some City experts predict the figure will be negative.
They will come as Mr Osborne announces plans to extend an £80billion scheme to make cheap lending available for small businesses and homebuyers in his latest attempt to boost the recovery.
But yesterday David Riley, managing director of Fitch, criticised the Chancellor’s economic strategy.
He said: ‘It’s not just about the austerity, the bottom line is the private sector borrowed too much in the UK, it’s been very hard to rebalance the UK economy’
He told Sky’s Murnaghan show that the UK ‘economic recovery has been very weak, almost non-existent’ and warned the rating could fall again.
Disaster: The UK has been unable to sustain the economic recovery from the financial crisis
Mr Riley added: ‘If there was a change of strategy such that basically the UK was to say, we’re not going to try and cut this deficit over the next three, four years, we’re going to allow the national debt to continue to rise potentially indefinitely, then... it’s likely that the rating would fall [further].’
But Tory MP Mark Field insisted that the Government’s success in keeping interest rates low was a ‘triumph’.
More...
'Naive' Miliband is attacked by his own party over secret George Galloway meeting
The squirrel-killing Minister for Wildlife: Environment Secretary Owen Paterson shows photo of himself proudly holding dead greys hanging from traps - and then boasts: 'They won't get out of that'
Tory peer Lord Ashcroft to pledge half of his £1.2bn fortune to charity under Giving Pledge
The Chancellor is also facing calls from the Tory Right for more to be done to revitalise the entrepreneurial and tax-cutting spirit of the Eighties to create an economic and political revival.
Former defence secretary Dr Liam Fox will this week insist the party must do more for ‘both aspiration and opportunity’.
Dr Fox will tell the Midlands Industrial Council that Britain is still ‘over taxed, over regulated, and we spend and borrow too much’, and suggest the Chancellor freezes public spending for up to five years.
Critics: Liam Fox, left, and Alistair Darling, right, have attacked Mr Osborne from the Right and Left respectively
Controversy: Incoming Bank of England chief Mark Carney described the UK as a 'crisis economy'
He will argue that the Tories ‘must stand by those who put away something for a rainy day, making sacrifices today to protect themselves in times of need’.
Meanwhile, George Osborne plans to extend the scheme to make cheap lending available for small businesses and homebuyers.
The Treasury and the Bank of England are expected to announce an expansion of the £80billion Funding for Lending Scheme, established last year, within the next fortnight.
It offers commercial banks cheap cash – providing they pass on the money to customers in low-cost mortgages and loans to small businesses.
The scheme is credited with boosting the availability of mortgages, but officials now want to do more in the area of lending to small companies.