A LEADING economist has told an audience of Liverpool business leaders that a double-dip recession is not inevitable, despite last week’s shocking GDP figures.
The decline in UK gross domestic product, of 0.5% for the last quarter of 2010, came as a surprise, as most experts were predicting growth. December’s appalling weather was partly blamed, but even with this factor stripped out the economic performance was well below expectations.
It created a fear that the UK would be plunged back into recession.
However, Graeme Leach, the Institute of Directors’ chief economist, said he didn’t believe this was the most likely outcome. Addressing an audience of Liverpool business people at the offices of wealth fund manager Rathbone Brothers, Mr Leach said he believed the recovery would continue, albeit with “unusually slow growth”.
He added: “The IoD has long argued that the legacy of the financial crisis, anaemic money supply growth, the squeeze on real take-home pay and an already low savings ratio, meant that quarter-on-quarter growth over the 2010-11 period was likely to weaken.
“The fourth quarter figures will have two immediate impacts. First, they are likely to result in GDP forecast downgrades for 2011 – the IoD is forecasting just 1.3% growth this year. Second, talk of interest rate hikes will recede. The latest GDP and money supply figures make a strong case for a further extension in quantitative easing. We’re in for a rough ride, but there is some good news to be found in areas such as manufacturing, service and export sectors.”
