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A double dip recession occurs when a nation’s economic output declines, recovers briefly, but then goes back into recession again. The possibility of a double dip recession is an ambiguous one, as a number of recent economic events have indicated the British economy is staging a 'choppy recovery.'(Bank of England forecast, 11 August 2010)

Simultaneously, the spending cuts indicate the economy could be in danger of slipping into a double dip recession. This will discuss whether the double dip recession is really imminent in the current economic climate.

Effect of Spending Cuts

Firstly, let’s start with why there is a chance for the UK to plunge back into recession again. The emergency budget advocated tightening fiscal policy by cutting spending by £6bn (Emergency budget 2010) and opting for a loose monetary policy.

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