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Double-dip economic fears spark calls for a ‘plan B’

David Cameron insisted he would stick to tough deficit reduction plans yesterday despite “disappointing” figures that showed a shock fall in UK economic growth.

The Prime Minister launched a defence of the Government's strategy amid claims from Labour leader Ed Miliband that it was “hurting, not working”.

Question time in the Commons was dominated by the economy after Bank of England governor Mervyn King braced consumers for a bleak year ahead.

He used a speech last night to warn inflation would likely rise to |between 4% and 5% over the next few months and that the recovery from recession would be “choppy”.

It came after initial figures showed a 0.5% plunge in GDP in the last quarter — raising widespread calls for the Tory-Liberal Democrat coalition to present a “plan B” to avoid a double-dip recession.

The Organisation for Economic Co-operation and Development (OECD) praised the Government’s stance and Mr King made clear he believed the country was on the right course, he said.

However, TUC general secretary Brendan Barber said: “Yesterday's dismal growth figures and the governor's revelation that |ordinary people are paying a heavy price for the Government's economic policies, on top of huge cuts in vital services, make a plan B even more necessary.”

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