News Column

UK Economy Hopes to Avoid Triple-Dip Recession

April 22, 2013

Crucial economic figures will this week reveal if the UK managed to dodge a triple-dip recession amid mounting warnings over the strength of the recovery and the latest downgrade blow.

Most economists predict the initial estimate of gross domestic product on Thursday will show growth of 0.1% in the first three months of the year, which would mean the economy narrowly avoided its third recession since 2008.

However, experts are cautioning it will be a close-run result after a volatile start to 2013 following snowstorms in January and March and pressure in the construction sector.

Concerns are also likely to remain over the strength of recovery even if the economy did eke out growth, with Fitch becoming the second ratings agency to strip Britain of its AAA rating, on Friday, citing a weaker economic outlook and worse-than-expected progress on cutting debt.

The cut to AA+ came after incoming Bank of England Governor Mark Carney sparked fears by branding the UK a "crisis economy" alongside stricken eurozone countries.

The brutal assessment, made on the fringes of the International Monetary Fund's Washington meeting, followed comments by IMF chief Christine Lagarde that UK growth numbers were "not particularly good".

The IMF slashed UK growth forecasts from 1% to 0.7% for 2013 and 2014's projection from 1.9% to 1.5% as it said the private sector was being hampered by a lack of credit and economic uncertainty.

While Chancellor George Osborne is sticking by his deficit- busting programme, a Downing Street spokesman admitted the UK was facing "very tough times".

Philip Shaw, economist at Investec Securities, is forecasting 0.1% growth, but said there was a risk last month's snow hit activity more than expected, "suggesting there is a good chance the economy was flat and that it is possible that it contracted".

Source: Copyright UPI 2013