With new figures about to be released by the Office for National Statistics this coming Wednesday, there is some amount of concern as to whether or not the UK is in the throes of a double dip recession. Since the last quarter of 2011 saw a decrease in the GDP, down 0.3%, it is hoped that the ONT will show the 0.1% rise which many analysts believe to be the case. A recession is defined as negative growth in two consecutive quarters.
With all the flurry of activity in profits warnings in the first quarter of this year, there are still some reservations as to the actual ‘growth’ during that period. Compared year-on-year with last year, the first quarter of 2012 wasn’t much better as there were profit warnings totaling 73 in the first quarter of this year whereas in 2011 there were 75. Nonetheless, the first two months those warnings were at a 3 year high but March saw a dip in warnings to a low not experienced within the past 9 years.
On the flip side, the OBR (Office for Budget Responsibility) expects the economy in the UK to actually grow over the course of the entire year by 0.8%. Next year the OBR believes the economy will grow by 2% which would be a high not experienced in years. Then there are predictions by Ernst & Young which are a bit lower with projections of a 0.4% growth this year and 1.5% next year.
Alan Hudson of Ernst & Young does predict a growth in retail sales for this year but further said that other sectors will suffer losses, evening out the gains as it were. Mr. Hudson believes that the high cost of oil and uncertainty in the travel industry due to the Olympics are making this an especially hard year to forecast.
