LONDON (MNI) – The National Institute of Economic and Social
Research believes that the economy grew 0.5% in Q3, but also said that
the current recovery could prove to be the weakest since the First World
War of 1914-1918.
NIESR estimates that output grew by just 0.5% in the three months
ending in September after growth of 0.4% in the three months ending in
August.
If this growth rate materializes it would show growth running below
the Bank of England Monetary Policy Committee’s most recent forecast.
In its August Inflation Report the MPC’s implied forecast was for
0.75% growth in Q3, with the Report forecasting a rebound after Q2
growth was depressed by one-off factors.
Even if Q3 does show some rebound, and 0.5% would be close to trend
on some estimates, there is now concern over Q4 growth.
“Output surveys have deteriorated markedly, suggesting that GDP
might be broadly flat in the fourth quarter,” David Miles, MPC member
said in a speech Monday.
NIESR research has highlighted just how drawn out this recovery is
proving to be historic standards.
Former NIESR Director, and now MPC member Martin Weale, said in a
recent speech that the forecast for GDP growth in the BOE’s August
Inflation Report showed “output is now not expected to pass its level of
March 2008 until late in 2012.”
“If this proves correct, it will make the current period of
below-peak output the longest such period sustained by the British
economy since 1920 and, quite possibly, the longest of the industrial
age,” he added.
–London bureau: +4420 7862 7491; email: ukeditorial@marketnews.com
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