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Saturday 11th of July 2009
July 7, 2009

NIESR report dashes hopes of a imminent recovery in the UK


by Kay Murchie
”NIESR

The National Institute of Economic and Social Research (NIESR), the influential think tank, has forecasted that gross domestic product (GDP) fell 0.4% in the three months to June - the fifth consecutive quarter of decline.

Official GDP figures for the April to June period are due to be released at the end of this month.

At the end of last month, the NIESR said the UK economy grew in May by 0.1% and follows a similar rise in the previous month and was the first growth in a year. However, weak industrial output data has forced the NIESR to revise its GDP figures.

The NIESR report said: “Revisions to the official estimates of economic growth in the first quarter of 2009 suggest that March can no longer be considered the trough of the recession.”

“However, on the basis of the monthly profile we estimate that the UK economy is now stagnating rather than continuing to contract at a sharp pace.”

Last week, official figures revealed that the UK economy shrank by 2.4% in the first three months of 2009 - far worse than expected and the biggest quarterly decline in 51 years.

In related news, the British Chambers of Commerce, the leading business group, has voiced its concern about a recovery in the UK.

While the group believes that the worst of the UK’s recession is over, it said talk of a recovery is “premature”.

Finally, the Bank of England’s Monetary Policy Committee will start its rate-setting meeting tomorrow and will announce its decision on Thursday lunchtime. While interest rates are expected to stay at the historic low of 0.5%, it is unsure whether the Bank will expand its quantitative easing programme, in light of this week‘s economic news.

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