UK is back in recession, experts claim

The UK is back in recession once again, meaning a tough time for savers and borrowers alike this year.

According to the Institute for Public Policy Research ippr, judging by the figures for growth in October and November, teamed with the poor retail performances over the Christmas period, it is highly likely the UK is in a technical recession.

Tony Dolphin, senior economist at the ippr and associate director for economic policy, said that growth is likely to remain stalled until the second half of this year.

"The monthly data that we have for October and November of last year and [the fact] that the survey is of business confidence, but also consumer confidence, is reasonably well correlated with growth in the short-term," he explained.

"It does suggest that we're back in recession."

However, he indicated that the fall in GDP in the last quarter of 2011 and the first three months of this year is likely to be small, meaning that the recession is unlikely to be as deep as the one experienced in 2008.

Indeed, it is for this reason he referred to the recession as technical, meaning two quarters of negative growth, but it is unlikely to have the long-lasting impact of previous recessions.

The ITEM Club Winter 2011-12 UK forecast echoed the prediction that the UK is in a technical recession and agreed that it would be countered by the second half of the year.

It suggested that in the last two quarters of 2012 falling inflation will aid a consumer-led recovery by increasing confidence.

However, the thinktank added that unemployment is expected to rise just as inflation falls, to provide a fresh concern for consumers.

"The forecast shows unemployment just shy of three million early next year, at 9.3 per cent of the workforce," ITEM predicted.

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2012-01-17 13:23:31 © Moneyextra.com