Recession 'ended in third quarter'

Figures are set to show recession all but ended between July and September
12 April 2012

The UK recession all but ended between July and September, official figures are expected to show.

Economists predict a marginal 0.1% decline for the third quarter of 2009 after construction output for the period was revised higher.

The 0.1% fall would be much shallower than the 0.4% first estimated, which was itself revised upwards by the Office for National Statistics to 0.3% in November.

But it would still represent a record sixth quarter of recession in a row as the UK lags behind its international rivals in recovery.

While most experts predict a small decline, flat quarter-on-quarter output - signalling an end to recession as the economy stops shrinking - is also a possibility.

Investec's David Page said: "We doubt that this revision will be the final word on the third quarter and would not be surprised to see the quarter recorded in positive territory at some point in the future."

The swing in the construction data came after a 1.1% decline was revised up to 2% growth in the third quarter. This should add 0.2% to the UK's overall output, despite construction's relatively small 6.3% share of the economy, IHS Global Insight's Howard Archer said.

Any improvement - or even an official end to recession - is unlikely to be greeted with much cheer however as fears of a "double dip" loom.

The final quarter of 2009 should see positive growth as consumers spend in the run-up to Christmas, but prospects for 2010 are more uncertain as households brace themselves for tax hikes and the banking system continues its slow process of repair.

Mr Archer said: "There is a serious danger of a loss of momentum early in 2010 as VAT rises back up from 15% to 17.5% and the car scrappage scheme ends. We suspect the upside for growth will be limited for some time to come by elevated and still rising unemployment, stretched consumer and corporate balance sheets, and muted bank lending amid still serious financial sector problems."

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