Double whammy of bad news wings its way to the Chancellor

Fears grow that ONS data will show Britain in the dreaded grip of a triple-dip recession

George Osborne faces a potential double whammy of dire news this week that would further ratchet up the pressure on the Chancellor to change his economic course.

The Office for National Statistics will release its estimate of the GDP growth figures for the first quarter of last year, which could show that the UK has slipped into an unprecedented triple-dip recession. The ONS is also due to release the public borrowing figures for the final month of the 2012-13 financial year, with analysts warning of the possibility it could show the annual budget deficit is rising, rather than falling. City analysts expect the March public finances figures, released on Tuesday, to show government borrowing of around £15bn in the month.

This would leave the total deficit for 2012-13 (stripping out all the various distortions such as transfer of interest payments from the Bank of England) at £117bn, around £4bn lower than the £121bn borrowed in 2011-12.

But analysts also warned there is chance that tax revenues could be weaker than anticipated thanks to George Osborne's reduction in the top rate of income tax, which could push total borrowing for the year higher than last year. "It's possible that some people might have moved their income tax payments into the next tax year to take advantage of the 45p rate introduced in April," said Martin Beck of Capital Economics. "That could depress tax revenues".

This would be a political embarrassment for the Chancellor who has gone to extreme lengths to prevent the total deficit rising on last year, including slashing departmental spending in his March Budget and delaying subscription payments to international bodies the World Bank. Even more serious for the Chancellor would be a negative figure for GDP growth in the first quarter of this year, due on Thursday, which would confirm that the UK has entered its third recession since 2008. Although the consensus forecast is for a 0.1 per cent increase in GDP for the quarter, there is a good deal of variation between individual predictions. As a result, analysts say it is touch-and-go whether the economy managed to eke out any growth in the first three months. Although there have been signs the services sector, which accounts for three-quarters of the economy, did not contract between January and March, the general expectation is that construction and manufacturing sectors were a drag on growth. "There is major uncertainty over the likely outturn, given that it is unclear just how much economic activity was hit overall during the first-quarter by the cold weather that occurred in January, and then again in March" said Howard Archer of IHS Global Insight.

Last week the International Monetary Fund slashed its 2013 growth forecast for the UK to just 0.7 per cent and said the Chancellor should consider slowing the pace of spending cuts in order to support the recovery – something Mr Osborne has steadfastly resisted for the past three years.

Furthermore, on Friday Fitch became second ratings agency to remove Britain's top AAA rating, citing "a weaker economic and fiscal outlook". The ratings agency followed Moody's which made a similar cut to Britain's credit rating in February.

Start your day with The Independent, sign up for daily news emails
Voices
There will be a chance to bid for a rare example of the SAS Diary, collated by a former member of the regiment in the aftermath of World War II but only published – in a limited run of just 5,000 – in 2011
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm tomorrow
Arts and Entertainment
X Factor winner Ben Haenow has scored his first Christmas number one
music
Arts and Entertainment
James May, Jeremy Clarkson and Richard Hammond in the Top Gear Patagonia Special
tv
News
File: James Woods attends the 52nd New York Film Festival at Walter Reade Theater on September 27, 2014
peopleActor was tweeting in wake of NYPD police shooting
PROMOTED VIDEO
News
Claudia Winkleman and co-host Tess Daly at the Strictly Come Dancing final
people
News
i100
Extras
indybest
News
peopleLiam Williams posted photo of himself dressed as Wilfried Bony
Sport
Martin Skrtel heads in the dramatic equaliser
SPORTLiverpool vs Arsenal match report: Bandaged Martin Skrtel heads home in the 97th-minute
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
The Apprentice finalists Mark Wright and Bianca Miller
tvBut who should win The Apprentice?
News
The monkey made several attempts to revive his friend before he regained consciousness
video
Extras
indybest
News
Elton John and David Furnish will marry on 21 December 2014
peopleSinger posts pictures of nuptials throughout the day
Life and Style
A still from the 1939 film version of Margaret Mitchell's 'Gone with the Wind'
life
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'
Marian Keyes: The author on her pre-approved Christmas, true love's parking implications and living in the moment

Marian Keyes

The author on her pre-approved Christmas, true love's parking implications and living in the moment
Bill Granger recipes: Our chef creates an Italian-inspired fish feast for Christmas Eve

Bill Granger's Christmas Eve fish feast

Bill's Italian friends introduced him to the Roman Catholic custom of a lavish fish supper on Christmas Eve. Here, he gives the tradition his own spin…
Liverpool vs Arsenal: Brendan Rodgers is fighting for his reputation

Rodgers fights for his reputation

Liverpool manager tries to stay on his feet despite waves of criticism
Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

Amir Khan attacks the Taliban

'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
Michael Calvin: Sepp Blatter is my man of the year in sport. Bring on 2015, quick

Michael Calvin's Last Word

Sepp Blatter is my man of the year in sport. Bring on 2015, quick