Britain Will Narrowly Escape Triple Dip Recession - Poll
By Shane Croucher | February 14, 2013 1:09 AM EST
Britain will escape a triple-dip recession by a whisker, according to a fresh poll of economists.
It follows the Bank of England governor Mervyn King's assertion that there is "cause for optimism" over the flat economy which is slowly recovering, as an improving picture emerges from early data in the first quarter to suggest there will be no third slump.
The economy will grow by 0.2 percent in the first quarter, predict those surveyed, after a 0.3 percent contraction in the final three months of 2012, which was dragged down by slower-than-expected oil production from the North Sea fields and a stagnant service sector.
"We'll miss it - narrowly," said Ross Walker, UK economist at RBS, to Reuters, which conducted the poll of 55 economists. "The underlying picture is not really affected by it. Where it does matter is if you were to get a negative print then it can weigh on confidence, certainly from a business investment point of view."
In its latest quarterly inflation report, the Bank of England said the UK economy is going through a "slow but sustained recovery" from the financial crisis.
"Growth is likely to remain weak in the near term. But further out, a continued easing in domestic credit conditions ... together with a stronger global backdrop, underpin a slow recovery in both demand and effective supply," said the report.
The Bank of England has pumped £375bn a stimulus into its gilt-purchasing quantitative easing programme, which has held down UK sovereign debt yields, which it is open to expanding in the future should the outlook worsen.
Some economists think an extra £50bn will be put into the programme in the coming months.
Improving Q1 data
Private service sector firms saw a return to growth in January after falling into recession in December, according to a monthly index compiled from surveys of purchasing managers.
In the same measure for the manufacturing sector, output continued to grow in January, though the pace of its expansion had slowed across the month.
Construction firms reported no change in pace from their December contraction, with activity remaining at a six-month low.
Meanwhile businesses are confident in their outlook over the coming months.
The Business Confidence Monitor index compiled by the Institute of Chartered Accountants in England and Wales hit 12.8 in January, up sharply from the fourth quarter's 4.2.
A separate survey by Britain's biggest lobbyist, the Confederation of British Industry, found growing optimism among SMEs about their outlook for the following three months, with most anticipating output and domestic orders to rise.
A Credit Conditions Survey by the Bank of England pointed to a surge in bank lending in the first three months of the year, off the back of stimulus from the Funding for Lending Scheme (FLS).
Under FLS, banks are offered cheap loans as an incentive to increase their affordable lending to the real economy of smaller firms and individuals.
To contact the editor, e-mail: