LONDON (MNI) – Bank of England Governor Mervyn King said the BOE
was expecting a “zig-zag” pattern of the quarterly growth this year and
the detailed forecasts underpinning the quarterly Inflation Report,
published Wednesday, highlight this.

The “numerical parameters” of the February Inflation Report imply,
on Market News’ calculations, that the central bank has stuck with its
forecast of 0.9% growth in calendar year 2012. The quaterly profile,
however, has changed with the BOE now forecasting 0.24% q/q growth in
Q1, followed by just 0.03% in Q2 and then 0.55% in Q3.

These projections show the UK avoiding a technical recession, two
consecutive quarters of negative growth. The BOE projections show Q4
2011 growth at -0.12%, a shade above the first official estimate of
-0.2%.

Growth is expected to pick up markedly in calendar year 2013,
rising to 2.77% and to 3.32% in 2014.

The BOE publishes yearly growth forecasts and a “backcast” of GDP
forecasts, and the quarterly growth numbers have to be backed out from
these.

The BOE’s modal forecasts show yearly GDP at 2.94% in Q1 2014 and
3.36% in Q1 2015. There is zero skew in the forecasts, with mode, median
and mean all identical.

At last Wednesday’s Inflation Report press conference, when only
the visual projections were published, King said “For much of this year,
there is likely to be a ‘zigzag’ pattern of alternating positive and
negative quarterly growth rates.”

The detailed numbers show on the central view that quarterly growth
stays positive in Q2, but only just. The national holiday for the
Queen’s Diamond Jubilee in early June is set to hit Q2 economic
activity.

Back in November, the BOE was forecasting almost flat Q1 growth,
but this is now seen firmly positive with activity surveys coming in
strong in January.

The inflation projections show CPI at 1.78% two years ahead and
1.9% three years ahead, again with no skew to the forecasts.

–London newsroom 0044 20 7862 7491; email: drobinson@marketnews.com
puglow@marketnews.com

[TOPICS: M$B$$$,M$$BE$]