"2011 has been the year of the reluctant recovery. Growth has disappointed, both here and abroad." This is the view of Bank of England Governor Mervyn King.
But will economic growth once again disappoint in 2012?
Economic growth is at least ongoing at present. Here we look at latest official data on UK economic growth (published immediately prior to Christmas) and round up growth forecasts from a number of economic commentators.
Latest UK GDP data paint mixed picture of economic growth
Chancellor George Osborne received something of a welcome pre-Christmas gift in the shape of an upward revision to growth figures - albeit a very small one.
The UK economy grew by 0.6% in the third quarter of 2011, according to latest revised estimates of growth in gross domestic product (GDP) published by the Office for National Statistics (ONS) just before Christmas (Tuesday 22 December 2011).
This is up by 0.1 percentage point when compared with the preliminary and first revised estimates, both of which put third-quarter GDP growth at 0.5%.
However, there were also other less positive revisions in the GDP data release. As Sunday Times Economics Editor David Smith points out, "the third quarter's gain is the second's loss - that has now been revised down from 0.1% to zero."
GDP prospects for 2012: A round-up of expert forecasts
Here is a round-up of latest GDP growth predictions from expert commentators:
- Bank of England Governor Mervyn King says UK GDP growth will be "flat or close to zero" over the first half of 2012.
- CBI Director General John Cridland says: "2012 is going to be a hard road but if we are canny and act now to put in place solid economic foundations, we will be stronger and secure a better future for ourselves. We need to identify how the UK will earn its living in the years ahead and that means adjusting to change." The Telegraph reports that the CBI's "base scenario" projection is that the UK economy will rebalance itself, with GDP growth averaging 1.6% until 2015.
- "The annual rate of economic growth is forecast to remain below 2% until 2014, which in combination with a return to faster growth in productivity will moderate the pace of jobs recovery and prevent unemployment from falling below 2.5 million before the middle of the decade." This is according to the CIPD.
- Goldman Sachs expects 0.7% GDP growth for the UK in 2012, compared with -0.8% for the eurozone. Goldman Sachs says: "Our economic forecasts assume some resolution to the eurozone debt crisis in the next few months. But the chances of a more chaotic outcome, in particular a break-up of the euro, although still small, have grown."
- The Office for Budget Responsibility (OBR) predicts that the UK
economy will grow by 0.9% over the course of 2011,
with growth slowing to 0.7% in 2012. The BBC's Stephanie Flanders warns
that even these predictions could prove "optimistic." She says: "If
there is a recession in the eurozone, it is difficult to see how that
forecast for 2012 would be achieved." Indeed, a majority of economists polled by the BBC believe that a double-dip recession is inevitable for Europe in 2012.
- The UK economy will contract by 1.3% in 2012, says Standard Chartered. It says: "The UK economy is likely to be in recession going into 2012 as the negative impact of fiscal tightening and falling real incomes is compounded by a downturn in demand from the UK' largest trading partner, the euro area. We expect GDP to contract in H1-2012, before bottoming out and eventually recovering in H2-2012."
XpertHR's January 2012 economic commentary looks in detail at economic prospects for the coming year.