NIESR says the UK double-dip recession is finally over

The National Institute of Economic and Social Research (NIESR) predicts that the UK economy emerged from its double-dip recession in the third quarter.

It says the economy grew by 0.8 per cent as it regained momentum after the extra holiday for the Queen’s Diamond Jubilee celebrations.

NIESR says this is the most “robust” growth for more than two years, since the three months ending in July 2010.

However, it says that the economy is likely to continue to grow in the next few quarters but not at the same pace.

NIESR said: “This is the most robust rate of growth since the three months to July 2010. However, the strength of the figure for the three months to September is largely an artefact of special events. Economic growth is expected to be at a significantly slower pace in the coming quarters.”

The rate of growth in the three months to August 2012 was just 0.1 per cent and NIEST says that the acceleration of growth was because of “special events”.

The report suggests that if the reversal of the negative impact of the extra bank holiday and the inclusion of Olympic ticket sales were stripped out of the figures, the economy would have grown by just 0.2 or 0.3 per cent.

NIESR says that the period of recession is over but the depression, defined by NIESR as a period when output is below its previous peak, is set to continue.

A recession is defined as two consecutive quarters of negative growth. The UK economy shrank by 0.4 per cent in the final quarter of 2011, by 0.3 per cent in the first quarter of 2012 and by 0.4 per cent in the second quarter of 2012.

Output is not expected to reach the peak seen in early 2008 until sometime in 2014.

The official estimate for the third quarter will be published by the Office for National Statistics on October 25.

However, recent data suggests that the UK economy is still struggling.

Yesterday the IMF revised its prediction of growth for the UK economy for 2012, predicting that it will shrink by 0.4 per cent in 2012 and then grow by 1.1 per cent in 2013.

Meanwhile, figures from the Office of National Statistics (ONS) showed that the trade deficit for August was £4.2 billion, the second highest monthly deficit ever recorded.

Chris Leslie MP, Labour’s shadow Treasury minister, said that even if the prediction of growth of 0.8 per cent by NIESR is true it still means that the economy has shrunk by 0.2 per cent in the past 12 months.

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