Fears of double-dip recession despite sharp rebound in UK economy
A double-dip recession remains on the cards despite the UK economy notching up record growth between July and September.
Official figures showed the economy surging out of recessionary territory with record growth of 15.5 per cent in the third quarter.
However, the recovery slowed sharply even before the second lockdown English lockdown kicked in. The Office for National Statistics (ONS) said the economy grew by just 1.1 per cent month-on-month in September.
Chancellor Rishi Sunak warned growth is likely to slow further over the fourth quarter and said there are “hard times ahead”.
Experts are forecasting a sharp fall in gross domestic product (GDP) this month caused by the second English lockdown, amid fears of a double-dip recession if there are at least two successive quarters of falling output.
Kay Daniel Neufeld, head of macroeconomics at the Centre for Economics and Business Research, said: “The strong bounce back in third-quarter GDP was expected as the economy opened again over the summer.
“The data show that the recovery was led by consumer spending boosting output in the likes of the hospitality and retail sectors.
“For Q4, the outlook is challenging given the new lockdowns. However, if a vaccine is approved in the next week, we expect this to be a shot in the arm for business and consumer confidence with the potential to unlock a wave of consumer spending and investment ahead of Christmas.”
Ivan Petrella, associate professor of economics at Warwick Business School, said: “Looking at more frequent indicators of economic activity suggests the economy has been back in negative territory since October.
“There is no sign we are out of the recession yet and there is a lot of uncertainty for the months to come. Economic recovery will go hand in hand with resolving the health crisis associated with the pandemic.
“The furlough scheme and the more general income supporting policies put forward by the Treasury have clearly helped to avert a much more severe contraction of the economy.
“Given the current situation, the further measures announced by the Treasury over the last few weeks are clearly a much needed and welcome intervention.”
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