NIESR warns of period of stagnation

| September 8, 2009
”NIESR

Influential think tank, the National Institute of Economic and Social Research (NIESR) said today that Gross Domestic Product (GDP) grew 0.2% in the third quarter after a 0.3% fall in the April to June period.

The NIESR specialises in estimating GDP prior to the release of figures from the Office for National Statistics.

However, while the Institute said the figures reinforced its opinion that the UK recession ended in May, it warned that the end of recession could turn to a period of stagnation.

The NIESR also cautioned that a return to growth should not be confused with a full economic recovery.

It comments: “There may well be a period of stagnation now, with output rising in some months and falling in others; the end of the recession should not be confused with a return to normal economic conditions.”

Many economists are forecasting that output in the July to September period will grow after manufacturing figures published today revealed a 0.9% rise during July, boosted by a sharp improvement up in car production.

The figure was treble the figure that analysts had forecast and the fastest rate in 18 months.

However, output is still down by 10.1% compared with a year ago.

The rise in factory output resulted in a rise in Sterling, which rose more than 1% against the US dollar.

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