According to Ruth Lea, economic adviser at the Arbuthnot Banking Group, a "triple dip" recession may be avoided by a whisker looking forward at the preliminary estimate for GDP for 2013Q1, numbers for which will be released on 25 April.
"The "second dip" in recession was between 2011Q3 and 2012Q1, when GDP fell about 0.5% overall. GDP declined by 0.3% in 2012Q4 and if GDP falls again in 2013Q1 then the economy will, indeed, have experienced a "triple dip" recession although, as we discussed in a recent Perspective, a more meaningful description of the economy’s performance since the end of 2010 would be nearly ‘stagnant’, said Lea.
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Putting aside the possibility of a "triple dip", recent economic news has been, on balance, disappointing, said Lea. "Unemployment rose by 70,000 in the three months December to February, compared with the previous three months, to 2.56m (7.9%)." she added.
Bank lending to businesses continues to be very weak, according to Lea. "According to the Bank of England it fell by GBP2.8 billion in February, contracting by nearly GBP5 billion in the three months to February. The decline was "broad-based across the sectors", with both small and large companies borrowing less from the banks. But the BoE noted that larger businesses had other sources of finance, such as the capital markets, and net bond issuance had increased. Turning to lending to individuals, the situation was more positive," said Lea.
Additionally, IMF downgraded its growth forecasts for the UK from 1.0% in 2013 and 1.9% in 2014 (in January) to 0.7% and 1.5% respectively.
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