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Quarterly Newsletter - Spring 2013

The UK economy has been struggling to avoid sliding into a triple-dip recession, and the announcement earlier today that the economy has grown by 0.3% in the first quarter of this year will have been greeted with a huge sigh of relief in the Treasury and among members of the coalition government.  However, a 0.3% improvement is not much to shout about, but it will restore some of the confidence which recently has taken a pounding.

After Moody’s removing Britain’s top AAA rating in February, Fitch became the second ratings agency to do the same a week ago.  The third of the big three agencies, Standard and Poor’s, declined to follow its rivals but said that the British economy remains on “negative watch”.  Even the International Monetary Fund waded in when its chief economist, Olivier Blanchard, criticised Chancellor Osborne for sticking to his “A” plan and suggested it might be better to consider an adjustment to the current fiscal policy.  As there will be a full IMF assessment of the UK’s situation in May, the Chancellor saw fit to dismiss Mr. Blanchard’s criticism as merely the opinion of one individual rather than the official IMF view.  Still, the man in question has an impeccable pedigree: after studying in Paris, he obtained his PhD in economics at the Massachusetts Institute of Technology.  He then taught economics at Harvard for six years before returning to do the same at the MIT, finally becoming the Chairman of their Economics Department.  He has also been an adviser to the Federal Reserve Banks of Boston and New York, and in 2008, he was appointed chief economist at the IMF.

Our Chancellor, on the other hand ...