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Peter Dutton warns that a recession in the US is inevitable

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Opposition Leader Peter Dutton says “this Prime Minister knows what’s coming”. Photo: NCA NewsWire / Gary Ramage

Opposition Leader Peter Dutton said the US was going into recession and “this prime minister knows what’s coming”.

The key call comes as Treasurer Jim Chalmers prepares to deliver his first Budget next month, which he says will be the “bread and butter” of trying to bring down inflation.

The opposition is warning him and Prime Minister Anthony Albanese not to make any mistakes, as Mr Dutton gave the strongest and most frightening statement by an Australian politician that the US was “going into recession”.

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This followed the decision by the US Federal Reserve to raise interest rates to levels not seen since the global financial crisis to catch up with rising inflation.

The US Federal Reserve has initiated a rate hike in an attempt to limit the rapid growth of inflation.  Photo: Spencer Platt/Getty Images
The US Federal Reserve has initiated a rate hike in an attempt to limit the rapid growth of inflation. Photo: Spencer Platt/Getty Images

“There is a general consensus among commentators and economists that the US is going into recession and the UK is at least likely to go into recession,” Mr Dutton said.

“Over the next few years there could be some very serious obstacles, but governments always throw these curve balls at themselves, they always have issues to deal with.

“This prime minister knows what’s coming.”

While economists warn it could have a trickle-down effect on Australia’s economy, Mr Dutton hopes such headwinds can be avoided.

“I don’t think we’re going to have a recession until Labor really, really stumbles,” he said.

“It worries me that they’re making the wrong decisions.”

Opposition Leader Peter Dutton said the US would
Opposition Leader Peter Dutton said the US would “enter” recession. Photo: NCA NewsWire / Gary Ramage

Writing in Australia on Friday, Mr Chalmers reiterated that while there would be a “small” improvement in the $50 billion budget bottom line, it should be taken with a grain of salt given the “deteriorating” conditions the world was facing.

“While these budget improvements are temporary, spending pressures are permanent and intensifying,” he wrote.

“Our task is to make the budget, economy, people and society more sustainable.

“This means trying to address the problems in our clogged supply chains that are fueling inflation, and providing relief from rising prices that supports the economy without forcing the RBA to raise rates further.”

Among the considerations could be the future of the first-home buyer subsidy, which earlier this month Reserve Bank governor Philip Lowe said would cause inflation to rise by at least two percentage points.

Mr Dutton said he would wait to see if any of the measures Labor said were “too generous” were brought back into the budget.

“Home ownership in our country is particularly important … And every government should do what it can to support it because it is a significant asset,” he said.

Federal policy reporter

Canberra

Ellen Rawnsley is a federal political reporter based in the Canberra Press Gallery, covering everything from international affairs to Covid-19. She was previously Queensland general news reporter for NCA NewsW… Read more

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https://www.theaustralian.com.au/breaking-news/peter-dutton-warns-us-recession-inevitable-as-jim-chalmers-commits-to-basic-budget/news-story/83b17bcbfa2f0dbd596ba5299eee21d2

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