UK economy may never have suffered 'double dip' recession, claim researchers

 

The UK economy may never have suffered a "double dip" recession, researchers have said - just days after official figures showed it avoided an unprecedented "triple-dip".

Latest data shows that after the initial recession of 2008-2009, Britain fell into a second trough at the end of 2011 that lasted for three quarters but was much less severe than the first dip.

But a report from the National Institute of Economic and Social Research (NIESR) pointed out that latest official revisions to the figures meant it was "increasingly unclear" whether this second recession ever took place at all.

They show that gross domestic product dropped by a marginal 0.1% in the last quarter of 2011, followed by the same figure for the start of 2012, though in the second quarter it was a fall of 0.4%.

Last week's announcement that the first quarter of 2013 had seen 0.3% growth - after a decline in the previous three months - prompted positive headlines because it meant the UK economy had avoided a "triple-dip" not seen since the Office for National Statistics began its records in 1955.

But Simon Kirby, an economist at the NIESR, noted: "Revisions to data meant that the very notion of a 'double-dip' rests on the most modest of declines in output."

However he suggested that worrying about "double-dip" or "triple dip" distracted from real concerns about the economy.

"Obsessing about a couple of quarters where output experiences a minute fall distracts us from the clear trend: that of a stagnating economy."

The NIESR forecast growth at a sluggish 0.9% for 2013 as a whole, followed by 1.5% in 2014, with unemployment remaining flat at 8%.

It comes as figures from manufacturing yesterday offered a "glimmer of hope" that the downturn in the sector could be about to come to an end.

A review of the data by the ONS yesterday also cast doubt on whether there really was a "double-dip", noting that the declines in output in the three quarters that it covered were all modest.

The declines of 0.1% seen in the first couple of quarters were "actually within the statistical margin of error", it said.

A subsequent fall of 0.4% in the second quarter of 2012 was explained by the additional bank holiday called as part of the Queen's Diamond Jubilee celebrations.

"The impact of such special factors should not perhaps contribute towards a recession," the report said.

A review of the data by the ONS yesterday also cast doubt on whether there really was a "double-dip", noting that the declines in output in the three quarters that it covered were all modest.

The declines of 0.1% seen in the first couple of quarters were "actually within the statistical margin of error", it said.

A subsequent fall of 0.4% in the second quarter of 2012 was explained by the additional bank holiday called as part of the Queen's Diamond Jubilee celebrations.

"The impact of such special factors should not perhaps contribute towards a recession," the report said.

PA

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