A double-dip recession in 2012 is a possibility for the UK.But it is not a foregone conclusion.
Could the 2012 Olympics - which are now just 200 days away - produce an "Olympic bounce" to prevent a relapse into recession?
Potential uplifts to 2012 GDP growth
A number of factors could serve to improve prospects for UK GDP growth to some extent:
- Growth in the first quarter of 2012 will be aided by the Bank of England's October 2011 extension of quantitative easing. Martin Weale estimates "that the current programme of asset purchases [will] boost growth by up to 0.5%, in line with the Bank's official calculations." ONS publishes its preliminary estimate of Q1 2012 GDP growth on Wednesday 25 April 2012.
- Growth in the second quarter of 2012 could benefit from an "Olympic bounce." UK GDP growth in the second quarter of 2012 will be boosted by deferred revenue from advance Olympic ticket sales in Q2 2011. ING estimates that Olympic ticket sales are worth £400 million in total, which could have created a 0.2% "Olympic bounce" had they been incorporated into GDP data for Q2 2011. It remains to be seen what impact this deferred revenue will have on growth in the second quarter of 2012. ONS publishes its preliminary estimate of Q2 2012 GDP growth on Wednesday 25 July 2012.
- Growth in the third quarter of 2012 is likely to be boosted by the
Olympics themselves. ONS publishes its preliminary estimate of Q3 2012
GDP growth on Thursday 25 October 2012.
Impact of Olympics on growth is 'ambiguous at best'
"[T]he impact of holding the Games is ambiguous at best," says the Guardian's Heather Stewart. http://www.guardian.co.uk/business/economics-blog/2012/jan/06/london-olympics-not-economic-boon She argues:
[M]uch of the benefit [of hosting the Olympics] is from jobs created through construction, which is out of the way long before the opening ceremony, while the disadvantages - including less productive working as people huddle round their TV screens, and travel disruption as hundreds of thousands of supporters flock to London - take place during the games and afterwards.
Stewart also believes that we cannot bank on the Olympics to produce a "feelgood factor" to uplift the UK economy:
It is possible that new waves of public sector strike action in protest at pension cuts could coincide with the 2012 Olympics.
The Unite union has unanimously rejected the Government's 'final' offer on NHS pensions.
The BBC reports that Unite General Secretary Len McCluskey has said that this means that further strike action - potentially coinciding with the Olympics - could occur. McCluskey said:
As for the "feelgood factor," which David Cameron hopes will lift the mood of the nation as the sporting jamboree unfolds, it won't necessarily result in a sudden boost to consumer spending. In fact, it's just as likely to depress demand while we're all glued to our tellies.Could public sector strike action coincide with the 2012 Olympics?
It is possible that new waves of public sector strike action in protest at pension cuts could coincide with the 2012 Olympics.
The Unite union has unanimously rejected the Government's 'final' offer on NHS pensions.
The BBC reports that Unite General Secretary Len McCluskey has said that this means that further strike action - potentially coinciding with the Olympics - could occur. McCluskey said:
Our NHS executive unanimously rejects the government's pernicious attempts to make hard working and dedicated NHS staff pay more, work longer and get less when they retire. [...] The question of continued industrial action through the winter and the spring and into the summer towards the Olympics is obviously a possibility."The BBC reports that teaching unions "the NUT and NASUWT have [also] refused to agree to the most recent plan."
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