GDP figures set to foreshadow new recession

FEARS of a second recession are likely to heighten today as economists expect GDP figures to show the UK economy went into reverse during the final three months of last year.

The Office for National Statistics will publish its first estimate of GDP growth during the fourth quarter of 2011 and a majority of City forecasters are braced for a contraction of 0.1 per cent.

This would mark Britain’s first step towards a double dip recession amid fears that the economy is also likely to decline in the first quarter of this year.

Although some experts are optimistic that a negative reading may have been narrowly avoided after a better-than-expected performance in December from several sectors, such as retail, several leading economists believe the contraction could be even deeper. Two organisations, Standard Chartered and the Centre for Economics and Business Research, are predicting a 0.7 per cent dive.

Today’s GDP figures follow a stark warning from the International Monetary Fund (IMF) yesterday which warned the eurozone crisis had thrust the global economy “deeply into the danger zone”.

The IMF downgraded its expectations for global growth this year, from 4 per cent to 3.25 per cent.

It took an even greater axe to its UK forecast, slashing it from 1.6 per cent to 0.6 per cent.

However, this remains optimistic compared to some estimates, with Standard Chartered braced for a 1.3 per cent decline in 2012.