Barings warns of increased risk of double dip

The latest global economic research by Baring Asset Management’s (Barings) suggests that of the major global economies, the UK looks most vulnerable to a renewed dip into recession.

According to Barings, there is a slightly higher risk of the UK falling back into recession than there was a few weeks ago.

However, should the UK fall back into recession, Barings believes it will most likely stage a modest recovery.

All economists and reports have suggested that the recovery will be fragile, while some have expressed concern for a double-dip recession (whereby the economy goes into recession twice without having undergone a full recovery in between).

Earlier this month, leading business group, the British Chamber of Commerce (BCC), warned the UK economy faces a “high risk of a relapse“.

The BCC believes the UK economic outlook will remain highly uncertain for a considerable time.

However, Bank of England policymaker, Kate Barker, recently said the UK is unlikely to return to recession.

In an interview over the weekend, Ms Barker, who is a former housing adviser to the Government, said it is possible, however, that the economy could contract for one quarter.

“It’s possible we will have a quarter when GDP falls, but I don’t think it will be a double dip. I would be surprised if we go back to recession but I think recovery will be bumpy and fragile,” she said.

The UK economy emerged from recession in the fourth quarter of 2009 by experiencing growth of just 0.3%.

Discuss this in the Finance Markets forums

Story link: Barings warns of increased risk of double dip