Sunday, 20 January 2013

Triple-dip fears

A number of papers look at fears that the UK is at a serious risk of slipping into a triple-dip recession. Official data out this week is expected to show the economy shrank by an estimated 0.2% in the last quarter of 2012.

The Ernst & Young Item Club’s Peter Spencer says that the recent snowfall could hit sectors such as construction hard in the current quarter, thus increasing the chances of a triple-dip. He said: "Once you lose two weeks on a construction site, it is hard to get back." In the Item Club's winter forecast, out tomorrow, he comments: "The fourth quarter of 2012 is likely to have seen a significant slowdown.

Monthly output data for the early part of the quarter points to manufacturing output falling by around 1.8% and services being a little better than flat, as the Olympics boost unwound. However, in contrast to recent quarters, construction looks set to have provided a sizeable contribution after a sharp rise in output in October. This should have limited the decline in GDP in the fourth quarter to between 0.1% and 0.2%”.

The club's winter forecast expects UK GDP growth of just 0.9% this year before a slow recovery of 1.9% in 2014. Meanwhile, the Item Club has also forecast that house prices will rise 0.2% this year, before leaping 2.1% in 2014 and 5% in 2015.
The Sunday Telegraph, Business, 1     The Independent on Sunday, 86   

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