Barings warns of increased risk of double dip

| March 17, 2010 | 0 Comments

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%.

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