The UK is almost certain to fall into a triple dip recession according to forecasters after the latest manufacturing figures showed a surprise slump. It had been hoped that manufacturing would receive a boost from the weak pound as exports picked up, but it looks like that hasn’t happened at all.
This could also affect the overall 2013 figures, so we may see those numbers revised down as well.
There were instantly announcements made and comments given by a whole range of people in the economics and finance fields, with Scotiabank’s Alan Clarke claiming “this is the penultimate nail in the coffin in terms of triple-dip – it’s pretty much game over now. Unless we have a stellar performance from the services sector, we’re almost certainly in a triple dip.”
The services sector is unlikely to give the required boost, and the construction sector has already announced a fall in figures. James Knightley from ING sums up the situation and the bleak outlook: “We have already has poor construction numbers for the start of the quarter so the prospect of yet another return to technical recession is very real.”
He goes on to consider the changes this will have on the government and Bank of England’s approach to the economy, something many people will be trying to guess in the next few weeks: “This will intensify the pressure on the BoE to do more to help support the economy, given government officials suggest they have no intention of letting up on austerity. As a result more QE remains probable with sterling very much biased to the downside.” A boost in loans and investment to the sector is likely to be proposed, but that’s nothing new.
The government has also released a statement regarding the figures, as they had to, with an official spokesman for David Cameron stating: “I think what you are seeing in recent data releases is that, as the Prime Minister was explaining recently in his speech, we remain in a difficult economic period. That is why the Government is committed to sticking to the course, which we are beginning to see signs is working.”
The Prime Minister will likely give his own statement as well, either in the commons or to the press. He will undoubtedly be questioned about them in the Prime Ministers Questions tomorrow.