The UK economy is "becalmed," according to the EconomicsHelp blog:
If the global economy stalls, it will prove very difficult for a stagnant UK economy to buck the global trend. The UK economy is a like a boat becalmed on a lake, hoping someone will come and blow it along. It is little comfort that the UK boat is not sinking like some in Europe."The UK economy shrank by 0.4% in the second quarter of 2012, latest revised estimates of growth in gross domestic product (GDP) from the Office for National Statistics (ONS) reveal.
However, there is good news on the horizon. The double-dip recession is expected to end in the third quarter of 2012.
The London 2012 Olympics and Paralympics (and also the deferred value of 2011 ticket sales for these events) look set to boost growth in Q3 2012, returning the UK economy to positive growth.
The Office for National Statistics (ONS) publishes its preliminary estimate of Q3 2012 GDP growth next week, on Thursday 25 October 2012.
GDP forecasts round-up October 2012: Temporary rebound in prospect
So what can we expect from economic growth in Q3 2012 and beyond?
Markit Chief Economist Chris Williamson provides an overview of growth prospects:
[T]he UK economy may be on course to return to growth in the third quarter, ending the double-dip recession and hopefully helping to revive business and consumer confidence. [...] However, it is likely that the underlying trend remains one of very weak growth, or even economic stagnation. [...] the rebound that we are seeing in the data now will of course also only be temporary.This view that any economic boost from the London 2012 Olympics and Paralympics will prove to be a blip is shared by a majority of other commentators, as our latest monthly round-up of GDP forecasts shows:
- Economist David Blanchflower says (via Twitter), that the main GDP "concern is not Q3 which may well be positive but Q4 which is likely to be negative growth down 1.1% last 3qtrs where recession deniers now?"
- The British Chambers of Commerce (BCC) reports that its latest quarterly analysis of prospects for the manufacturing and services sectors suggests an economy in stagnation. Nonetheless, the BCC believes that next week's GDP data release from ONS will signal a return to growth: "The Q3 2012 results confirm that economic performance remains weak and inadequate. The official ONS assessment that the UK was in technical recession for three consecutive quarters is too gloomy. But it is clear that the economy has been stagnant for too long, and urgent measures are needed to enable businesses to drive a sustainable recovery. Though most key Q3 balances are weaker than in Q2, our results could still signal a return to positive GDP growth in Q3. This is because our Q2 survey pointed to a stronger economy than the ONS suggested."
- Ernst & Young ITEM Club says: "We still expect a substantial rebound in Q3, as the impact of the extra bank holiday unwinds. With a minor boost likely to come from hosting the Olympics, we should see growth more than offset any losses in Q2." Overall, it says that it "sees a return to growth in the second half of this year, leaving GDP down by 0.2% on the year."
- The IMF estimates that the UK economy will contract by 0.4% in 2012, but grow by 1.1% in 2013.
- The Institute of Chartered Accountants in England and Wales (ICAEW) says that "the economy is set to contract in 2012 and growth will be subdued in 2013." The ICAEW says that "the economy is set to contract for 2012 as a whole, and looks likely to show only very weak growth next year. [We forecast] a 0.5% contraction in economic output for 2012 as a whole, followed by growth of just 0.9% in 2013."
- NIESR estimates that GDP grew by 0.8% in Q3 2012. It says: "Our monthly estimates of GDP suggest that output grew by 0.8 per cent in the three months ending in September after growth of 0.1 per cent in the three months ending in August 2012. This is the most robust rate of growth since the three months to July 2010. However, the strength of the figure for the three months to September is largely an artefact of special events.W NIESR defines these "special events" as follows: "the reversal of the negative effect from the additional bank holiday in June 2011 and the allocation of Olympics ticket sales from last year." However, NIESR warns that "economic growth is expected to be at a significantly slower pace in the coming quarters."
- The OECD has
slashed its UK GDP forecast for 2012 from 0.5% to -0.7%.
- The Olympics effect will result in the UK economy growing by 0.6% in Q3 2012, according to a Reuters poll of 50 economists. However, the economists believe that the economy will contract by 0.3% over the course of 2012 as a whole, before rebounding to show growth of 1.2% during 2013. It should be noted that each of these forecasts has been revised down from Reuters' August 2012 poll.
- XpertHR economic commentary October 2012: A lack of oomph
XpertHR's economic commentary for October 2012 report on the following topics: the national minimum wage uprating for 2012/2013; the Government's new strategy to reboot the UK economy and what might be expected from the Chancellor's Autumn Statement 2012. We also consider trends in trade union activity in 2012 and beyond, and report the latest readings on key economic indicators of relevance to HR practitioners and pay specialists, including inflation, unemployment and pay awards.