Official figures published this morning reveal that the UK economy fared worse than expected in the final three months of 2012.
According to a preliminary estimate by the Office for National Statistics, the UK economy was hit by 0.3 per cent month-on-month contraction in the fourth quarter of last year. Economists had expected GDP to fall by just 0.1 per cent.
Economists have labelled the estimate – which could be revised up or down in the months ahead – as “disappointing” and warn that the UK could be on the brink of an unprecedented triple-dip recession.
Fidelity Worldwide Investment director of asset allocation Trevor Greetham
“A disappointing number. The UK economy is bouncing along the bottom in the weakest recovery in living memory. The more time that passes the clearer it is that America’s gradual and delayed approach to fiscal tightening is the right one.”
Capital Economics chief UK economist Vicky Redwood
“Given that a technical recession requires two consecutive quarters of falling output, this is arguably not a true “triple-dip” yet. But there are no hard and fast definitions, and another contraction in Q1 is quite possible anyway, especially given the snow disruption.”
Schroders European economist Azad Zangana
“The external environment is not helping either. The latest leading indicators from France suggest the recession there is set to deepen, while similar data from Spain and Italy also suggest more downside risks.”
Premier Income fund manager Chris White
“The UK GDP figures for Q4 were undoubtedly poor. There is still essentially no growth in the UK economy and no sign of any re-balancing of the economy as manufacturing output was down. Many analysts have pencilled in 1 per cent GDP growth for 2013 as conditions in the eurozone stabilise. I think you have to question this number as potentially optimistic, as the poor weather has got the year off to a poor start and there will be no Olympics to boost the economy this year.”
CBI director-general John Cridland
“After a difficult year, the UK economy has ended on a disappointing note. We think growth will continue to be fairly flat through the winter but momentum will gradually build later in the year, as the global economy picks up a little and confidence lifts.”
EEF chief economist Lee Hopley
“There are no positive takeaways from today’s first estimate of GDP in the final months of last year. Even assuming some unwinding of activity from the Olympics boost in the previous quarter, this still leaves no real signs of underlying growth in the economy. The news from industry was particularly weak.”
Markit chief economist Chris Williamson
“At the moment it remains too early to tell if the economy will triple-dip, but today’s numbers have greatly increased the risk of a new recession and a downgrading of the UK’s AAA credit rating. As such, the data pile ever more pressure on the Chancellor to seek ways to revive the economy in the March budget.”