Britain is in recession, experts claim

Leading economists predict that the next set of official economic figures will show that Britain has returned to recession. End Quote

(1888PressRelease) January 20, 2012 - Both the Ernst & Young ITEM Club and the Centre for Economics and Business Research (CEBR) believe that Britain's GDP shrank in the final three months of 2011 and will do so again in the first quarter of the year.

This will provide the two consecutive quarters of reduced output that are needed to constitute a recession.

Reports from both groups state that the health of the UK economy is closely tied to the overall health of the eurozone, which is still struggling to deal with its debt crisis.

A further spanner was thrown in the works late last week, when ratings agency Standard and Poor's decided to downgrade the AAA credit rating given to France, the eurozone's second largest economy.

Professor Peter Spencer, chief economic adviser to the Ernst & Young ITEM Club, said that recession now appears to be reality rather than possibility, but it will not be as damaging as the one experienced in 2009.

He said: "Figures for the last quarter of 2011 and the first quarter of this year are likely to show that we are back in recession and we are going to have to wait until this summer before there are any signs of improvement.

"But it's not going to be a repeat of 2009 - we are not going to see a serious double dip."

CEBR Chief Executive Douglas McWilliams added: "We take no pleasure in outlining such a bleak forecast. But the world is going through a fundamental change where previously poor economies are industrialising fast."

Professor Spencer does suggest, however, that inflation will fall back below the Bank of England's target rate of 2% by the end of the year.

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