Wednesday, 25 April 2012

UK double dip recession

"Most economists had expected Britain's $2.4 trillion economy to eke out modest growth in the early 2012, but these forecasts were upset by the biggest fall in construction output in three years coupled with anaemic service sector growth and a fall in industrial output.

"The BoE, and a number of private-sector economists, had argued before Wednesday that the underlying health of Britain's economy was stronger than ONS data suggested, due to relatively upbeat private-sector surveys and a fall in unemployment."

But ...

"The Bank of England has warned that there is a risk of another contraction in the second quarter of 2012, due to an extra public holiday. But unlike during the previous two quarters, it does not appear keen to provide further monetary stimulus through quantitative easing asset purchases, due to above-target inflation which looks stickier than before." = Conflicting message with the above message. => The economy is not getting better.

The ONS's preliminary estimates of GDP are the first released in the European Union, and are based partly on estimated data. On average, they are revised by 0.1 perce ntage points up or down by the time a second revision is published two months later, but bigger moves are not uncommon. => No real hope for upward revision, but probably downward.