An unexpectedly weak performance in industry has made a ‘triple dip’ recession more likely, according to experts. While there have been reports that the UK economy will start to post gradual growth in 2013, there are still doubts as to whether these figures will be achieved. Small businesses worried about the strength of the economy need to be aware that despite some recent good news, there’s still a long way to go.
The National Institute of Economic and Social Research has predicted this week that the pace of growth within the economy has slowed over the autumn, following a summer of Olympic fuelled growth. This is backed up by official figures that have shown a 1.7% drop in industrial output in September.
This latest forecast, published on Tuesday, showed GDP as expanding by just 0.5% in the three months to October. This is just half the speed of the 1% expansion in the three months to September which brought about the end of the ‘double dip’ recession. However, there are worries that these figures were skewed by Olympic spending and this would mean a worrying return to normality of knife-edge growth. Indeed, the NIESR expects it to be at least 2014 until we return to pre-recession levels of growth.
Industry makes up around 15% of the economy and so a weak performance over the next few months could make a triple dip recession more likely, as thought by experts; ‘UK factory output barely rose in September and energy production slumped, adding to evidence that the country risks sliding back into another downturn after the temporary growth surge enjoyed in the summer’, commented Chris Williamson, chief economist at Markit.
Bookmakers are giving 1-3 odds on the UK economy slipping back into negative growth in one of the next three quarters. Hopefully we can avoid the triple dip – but without the Olympic boost, what shape will the economy be in?