BCO conference 2013: The UK economy will post modest growth this year, but still runs the risk of further shocks, former chancellor Lord Lamont told the BCO conference in Madrid this morning.
The balance of power will continue to shift east, banks will struggle to lend freel,y and uncertainty in the eurozone will continue to cast a shadow, he warned, adding that austerity would continue.
“We are gradually recovering. I believe we will have modest growth this year. There are some bright spots including some parts of British manufacturing,” said Lamont.
“But it is clear that whoever wins the next election, austerity will have to go on. The difference between the two parties on the speed of deficit reduction has been very much exaggerated.”
Lamont said the UK should look across the channel to see how bad things could be. “In all the talk about double-dip and triple-dip as if it’s worse than a single dip that goes on forever, which is of course what we’ve had in the eurozone for six successive quarters,” he said.
And despite the “concentration on excessive austerity” only one country in the eurozone has reduced its indebtedness. He said a forecast of sub-1% annual growth in the eurozone was not “excessively pessimistic”.
The former chancellor warned of the dangers of governments worldwide stopping quantitative easing. “It’s going to be very difficult for governments to exit from those programmes without driving up interest rates,” he said.
He backed calls for a renegotiation of the UK’s relationship with Europe. It would be a “tremendous blow to the prestige of Europe” if the UK were to leave the EU and would be resisted, Lamont predicted.
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damian.wild@estatesgazette.com
