BNP Paribas issues tax warning

Date: 15th September 2009

Britain's economy has returned to growth but is likely to experience only a limited recovery over the months to come - with taxation sure to rise.

This is the view of Alan Clarke, an economist at BNP Paribas who also believes that the recession ended towards the "middle" of 2009.

The UK economy had been hit hard by the credit crunch, which led to GDP contracting by 2.4 per cent over Q1 and by 0.8 per cent over Q2.

However, a range of experts, including those from Defaqto and the National Institute of Economic and Social Research, now agree that the downturn has alleviated.

Official services and manufacturing data have also shown positive growth over recent months.

Mr Clarke added that the end of stimulus schemes from the authorities would provide a check to long-term growth of the economy as a whole.

"The recession probably ended around the middle of the year but we are not going to be seeing spectacular growth rates," he said.

"We are probably going to top out around the middle of 2010, particularly once the new government starts to raise taxes and cut government spending and that is going to ensure that growth never really gets that far above zero."