UK out of recession economic research institute claims

| October 10, 2012
UK out of recession economic research institute claims

The UK economy returned to growth in the third quarter according to the National Institute of Economic and Social Research (NIESR), marking an end to the double dip recession.

The NIESR estimates that GDP grew by 0.8 per cent in the three months ending in September, building on an improvement seen in the three months ending in August, when GDP grew by 0.1 per cent.

In its quarterly report NIESR said: “This is the most robust rate of growth since the three months to July 2010.

“However, the strength of the figure for the three months to September is largely an artefact of special events.

“Economic growth is expected to be at a significantly slower pace in the coming quarters.”

When the effects of special events, such as the extra bank holiday for the Queen’s Jubilee and the Olympics, are removed, underlying growth is estimated at between 0.2 and 0.3 per cent per quarter.

NIESR expects output to remain below its peak in early 2008, until 2014.

Other recent figures suggest that the UK economy is still struggling.

The International Monetary Fund (IMF) now expects the UK economy to contract by 0.4 per cent in 2012 and then grow by 1.1 per cent in 2013.

It had previously anticipated that the UK would return to growth this year.

The IMF has reduced its global growth forecast and warned of an ‘alarmingly high’ risk of rapid contraction in the global economy.

It is forecasting global growth of 3.3 per cent in 2012 and 3.6 per cent in 2013, compared with earlier forecasts of 3.5 per cent growth this year and 3.9 per cent in 2013.

One of the main reasons for the IMF’s global downgrade is the ongoing weakness in the eurozone.

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