Markets
Analysts predict bleak winter despite GDP growth
Matthew Jeynes, 22 December 2011
The UK’s economic growth for the third quarter of 2011 was revised upwards slightly this morning, but analysts are still forecasting a double-dip recession.
The third revision of GDP figures by the Office For National Statistics (ONS) showed that the economy grew 0.6 per cent rather than the 0.5 per cent previously thought.
However, GDP growth in the second quarter was revised downwards from 0.1 per cent to zero growth, while Britain’s current account deficit soared to £15.2 billion from £7.4 billion in the second quarter, the highest total since records began in 1955.
Market reaction was muted, with analysts pointing out that these figures were out of date and that the situation had already moved on.
ING’s James Knightley pointed out, ‘This all relates to data that is more than three months old, and the outlook for growth is darkening.’
Vicky Redwood, chief economist at Capital Economics, claimed that the report had not only done ‘nothing to improve the near-term economic outlook’, but that it showed that ‘the economy has made less progress on the rebalancing front than previously thought’.
She said, ‘We already have plenty of evidence to suggest that the economy has stalled or even contracted a bit in the fourth quarter.
‘The outlook for 2012 still looks pretty bleak – we expect the economy to contract for most of the year, with GDP dropping by 0.5 per cent in the year as a whole.’
The upwards GDP revision was largely thanks to the construction sector, which saw 0.3 per cent growth rather than the 0.2 per cent contraction previously thought.
Services grew by 0.7 per cent, up from 0.6 per cent, while industrial production was revised down to 0.2 per cent from 0.4 per cent.
Advertisement
Free Magazine: How To Invest For Income
Free Magazine: How To Invest For Income In this free edition of MarketViews, Peter Temple highlights key features that can make income-based investing generate such good results. Get your free copy here
Free Guide: 8 Common Trading Indicators
Get this free guide to find out how to use technical indicators to give you a sense of what the market will do next. Get your free copy here.
No hassle and no admin fees. Open an account now with The Share Centre. Find out more.
A free guide to Gold Investment
Physical Gold protects against global economic downturn by providing crucial portfolio balance. You can buy gold bars for your UK pension and receive up to 40% price discount via tax relief. Buy tax-free gold coins as an alternative to poor interest rates. Find out more and download this free guide to gold investment.
The TaxGuide.co.uk has a wealth of tips and advice from working out your tax bill, through to the latest personal tax rules. Get your personal tax tips today.
FREE Report: Inside Investment Trusts
Written by the team behind What Investment, this exclusive FREE report covers:
- Why Investment Trusts are better than Unit Trusts
- How new legislation is broadening the appeal of Investment Trusts
- Where to look for buying opportunities
- Why now is the time to buy Investment Trusts
- The Investment Trusts to invest in at the moment


Comments
Please register or login to comment on this article.