Recession ends but outlook's gloomy

Recession ends but outlook's gloomy

A spokesman for the statistics watchdog said it had received a number of queries about the Prime Minister's words

A spokesman for the statistics watchdog said it had received a number of queries about the Prime Minister's words

First published in National News © by

The longest double-dip recession since the 1950s will be declared over by official figures amid warnings about the underlying health of the economy.

Gross domestic product (GDP) - a broad measure for the total economy - is predicted by City experts to have grown 0.6% between July and September, ending three consecutive quarters of declining output.

But the bounce-back in the third quarter will be largely driven by one-off factors, such as clawed-back activity lost to the extra bank holiday for the Queen's Diamond Jubilee and a slight lift from the Olympics.

But looking through the "distortions", some economists have warned the UK is far from out of the economic woods and can expect growth to slow in subsequent quarters. Economic indicators, such as purchasing manager surveys, suggest the manufacturing and construction sectors remained weak throughout the period, although the powerhouse services sector should deliver a robust performance.

Howard Archer, chief UK and European economist at IHS Global Insight, warned any recovery was looking "fragile, feeble and far from guaranteed". "Looking through the distortions to GDP in the second and third quarter, the likelihood is that the economy is eking out limited growth," he added.

The figure, published by the Office for National Statistics (ONS), is a preliminary estimate based on the output side of the economy and is subject to revisions. The economy shrank by 0.4% in the second quarter, according to the ONS, which was revised up gradually from an initial estimate of a 0.7% decline.

Britons would be £1,800 a year better off had the country avoided the double-dip recession, a survey by PwC for The Times newspaper found.

John Hawksworth, chief economist at PwC, said annual incomes would have been 9% higher without the financial crisis, and the economy's output £200 billion - 12.8% - higher, with hundreds of thousands more people in work.

Meanwhile, a statistics watchdog is investigating claims the Prime Minister breached rules by hinting that good news can be expected in the GDP figures.

Labour said David Cameron's assertion in the Commons yesterday that positive signs on the economy "will keep coming" was a clear reference to the keenly-awaited numbers. But Mr Cameron's official spokesman denied that the Prime Minister was talking about the gross domestic product (GDP) figures and was simply reflecting a wider expectation of improvement.

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