Will The UK Slip Back Into Recession?

The UK officially emerged from recession when GDP went slightly positive (0.4%) during the last quarter of 2009, however is the UK economy likely to slip back into negative growth again soon?

New figures released today confirm that the economy grew by 0.3% for the first quarter of this year. It doesn’t take a mathematically genius to see that it was slightly lower than in the previous quarter, and that growth was painfully slow.

Whilst we don’t yet know what the current growth figures are, it looks like the recession between the second quarter in 2008 and the third quarter of 2009, was actually deeper than first thought – post recession growth rates of 0.3% are hardly inspiring economists with confidence that the economy is healthy.

The problem for the economy, though, is that the austerity measures announced in the emergency budget are not yet impacting significantly on consumer spending. The VAT rate rise, doesn’t take effect until January, for example.

If consumers start to tighten their belts, which they are bound to do, and the government starts to rein in it’s spending, which it has promised to do, then that 0.3% GDP growth figure is going to look very fragile.

There seems to be a strong likelihood that the UK will once again see negative GDP figures again soon and that means the recession may well be back with us.

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