Friday, 13 January 2012

UK growth nearly stalled

The UK economy barely grew in the final quarter of 2011, according to the National Institute of Economic and Social Research.

The institute estimates that the economy expanded by 0.1 percent in the three months to December, compared with growth of 0.3 percent in the three months to the end of November. According to the institute this implies the economy expanded by 1 per cent in 2011, half the rate of growth experienced in 2010 (2.1 per cent,).

The press release says The National Institute interprets the term “recession” to mean a period when output is falling or receding, while “depression” is a period when output is depressed below its previous peak. Thus, unless output turns down again, the recession is over, while the period of depression is likely to continue for some time.

Reuters reports that whilst George Osborne said there were "signs" the economy was turning a corner and there were reasons to be optimistic in a year when Britain will host the Olympic Games in London...

...Britain is teetering on the edge of recession as global growth slows, government spending cuts bite, and all-important consumers struggle with high inflation, tax hikes and slow wage rises.

You may recall at the beginning of December The Daily Telegraph reported The Office for Budget Responsibility (OBR) said that a bout of severe weather before the end of year could skew economic activity in such a way that Britain does not experience two quarters of negative growth....

Prof Nickell, a member of the OBR...said....“If you have a huge bout of heavy snow before Christmas that will probably rule out a double-dip recession because GDP will fall in the fourth quarter and bounce back in the first quarter",...but...he warned that disruption in the New Year would mean that the statistical masking of the slowdown could not take place. “It’s got to snow in the fourth quarter.”

Let's hope therefore we don't get a huge bout of heavy snow this month or in the following two months.

1 comment:

The Red Flag said...

0.1% is actually inside the accuracy margin so it could be slightly more, ore it could be slightly less.