According to the Centre for Economics and Business Research (CEBR), the UK has a 50% chance of being hit with a triple-dip recession in 2013. The economy contracted over the first half of 2012 before witnessing growth in the third quarter – but this was due to temporary factors such as the Olympic Games in London.
Douglas McWilliams, chief executive of the group, said: “The UK will probably have negative growth in Q4 2012 and there must be a chance of a weak Q1 2013 as well, although data from the ICAEW Grant Thornton Business Confidence Monitor and FSB Small Business Index have been encouraging enough to suppose there are cautious grounds for optimism going into 2013. So we give a 50- 50 chance on a triple dip.”
The CEBR also predicted that the Funding for Lending scheme is likely to have more of a positive effect on the real economy during 2013, while incoming Bank of England governor Mark Carney will use his first six months in the job to reformat the UK’s monetary policy.
Meanwhile, the Institute for Public Policy Research said 2013 will be a “groundhog year” for the UK economy with growth remaining weak, inflation continuing to fall and unemployment rising.
Last year, Tony Dolphin, the think tank’s senior economist, argued that UK economic policy has become little more than policymakers “hoping that something turns up” and forecasted continued weak growth for the foreseeable future.
“Thinking about prospects for 2013, it seems that time has stood still for the last 12 months and the same conclusion still holds,” he said. “Policymakers appear to have little idea how to boost growth in the economy and are left hoping that the news will get better.”
Dolphin added: “The risk in 2013 is that all the talk of years of austerity at home and continuing crisis in Europe creates a huge amount of uncertainty, which will dampen animal spirits to such an extent that the economy fails to grow again.”