UK recession fears grow as output weakens
Baku, October 11 (AZERTAC). The economy risks slipping back into recession after barely growing in the third quarter, a business group said on Tuesday, as data showed that manufacturers are running out of steam, Reuters reports.
The British Chambers of Commerce (BCC), which represents companies employing one in six UK workers, said the Bank of England`s latest asset purchase programme may not be enough to avert a double-dip recession.
The business group estimated that the economy grew between 0.1 percent and 0.3 percent in the third quarter, and it warned that the downside risks were growing due to the euro zone debt crisis and worries about global demand.
"We can avoid a recession, but this relies on the government making some tough policy choices," said BCC Director General John Longworth. "The survey shows the real risks facing the economy and the need for the government to act now."
Separate estimates from an independent think tank were a bit more upbeat, suggesting the economy grew by 0.5 percent in the quarter through September.
However, the National Institute of Economic and Social Research (NIESR) said in its monthly estimate that the recovery from a deep recession that ended in 2009 was the weakest since World War One.
Britain`s finance ministry said the NIESR report showed that the economy was continuing to grow, although the recovery would not be smooth.
"Other data published today similarly shows that the economy is recovering but that the financial turbulence in the euro zone and the weaker outlook for global growth will mean that the recovery will be choppy," it said in a statement.
Despite record low interest rates of 0.5 percent, Britain`s economy has stagnated for nearly a year. Inflation of nearly 5 percent is squeezing people`s living standards as wages rise slowly and unemployment has started to increase again.
"We`re facing one of the toughest trading conditions this country has seen for decades," Phil Clarke, head of the country`s biggest retailer Tesco said.
The government is cutting public spending to erase a budget deficit that peaked at nearly 11 percent of output and has little scope for tax cuts or extra spending to boost growth.
The Institute for Fiscal Studies said on Tuesday that the median income in Britain was expected to fall by 7 percent in real terms between 2010 and 2013, the largest three-year drop for 35 years.
That would push an extra 600,000 children and 800,000 adults into poverty, the think tank said in a report.
The Labour Party accuses the coalition of choking growth by doggedly sticking to its original austerity drive. There are question marks over how effective the central bank will be with its second round of quantitative easing to pump money into the economy.
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