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article imageWill Britain end up in a recession?

By Richard Milnes     Jan 26, 2012 in Politics
Technically speaking a recession can be defined as two or more successive quarters of negative GDP growth. The UK's fourth quarter of 2011 has revealed a small contraction and now the government will be pressured to report a small rise in Q1 of 2012.
The Office for National Statistics (ONS), has just estimated a quarter 4 contraction of 0.2 percent.
HM Treasury figures obtained from independent organisations are predicting, on average, a small rise in GDP over the whole of the 2012 year, whilst the International Monetary Fund (IMF), are currently running with a slightly higher figure of 0.6 percent.
It may be that when broken down into the individual quarters, there will be another contraction in economic activity, before the economy slowly picks up again later in the 2012 year, if the HM Treasury report and IMF WEO report predictions do indeed turn out to be accurate.
Office for National Statistics
In its Statistical Bulletin ‘Gross Domestic Product Preliminary Estimate – Q4 2011’, released on 25th January, the ONS has estimated a 0.2 percent drop in GDP for quarter 4 of 2011.
A 1.2 percent decrease in production industries and a 0.5 percent decrease in the construction sector, contributed to the overall contraction in GDP.
HM Treasury
HM Treasury’s January 2012 ‘Forecasts for the UK economy: a comparison of independent forecasts’ report gives on overall median forecast increase in GDP for 2012 of 0.4 percent .
Its report includes the projections of 19 City organisations (such as investment banks) and 16 non-City organisations (such as the British Chamber of Commerce).
These are not necessarily the views of the Treasury, but the forecasting organisations.
International Monetary Fund
The International Monetary Fund’s World Economic Outlook (WEO) Update projections of 24th January have had to been downgraded, when compared to those of September 2011. Almost across the board, the WEF now believes its previous projections were too optimistic.
WEO growth forecasts for the UK are now predicted to be 0.6 percent for 2012 and 2.0% for 2013. However, these figures still look overly generous.
Summing up its current economic outlook, the IMF WEO update states that “global recovery stalls” and “downside risks intensify”.
Sources and Further Information
Office for National Statistics website
HM Treasury website
International Monetary Fund (IMF) website
More about Recession, Britain, GDP, ONS, Imf
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