Britain still stuck in recession

By SCOTT REID
Published on 22/07/2012 00:00

BRITAIN’S recession is almost certain to have stretched into a third quarter, figures this week will reveal, though analysts have upped the chances of a summer respite.

Businesses have continued to struggle during the spring, while an extra day’s public holiday resulting from the Queen’s Diamond Jubilee celebrations is likely to have taken its toll on economic output.

Analysts expect official data on Wednesday to reveal a fall in GDP of between 0.3 per cent and 0.4 per cent in the three months to June, dragging the UK’s “double-dip” 
recession into a third consecutive quarter.

The initial reading from the Office for National Statistics is based on the output side of the economy only and is subject to revision.

However, Howard Archer, chief UK economist at forecasting group IHS Global Insight, said developments on the expenditure side of the economy also give “good reason to fear that the economy contracted again”.

“Our best guess is that the economy contracted by around 0.3 per cent quarter-on-quarter in Q2,” he noted. “This would mark a third ­successive quarter of con­traction.”

Investec economist Philip Shaw forecast a 0.4 per cent decline in the second quarter.

Archer added: “The economy should be able to achieve GDP growth in the third quarter, as it is helped by the making up of some of the activity lost to the Queen’s Diamond Jubilee in the second quarter and also receives a limited overall boost from the staging of the Olympic Games.”