City economists are warning that the UK could be facing another recession as new GDP figures will be released on Thursday and they are expected to reveal that growth is coming to a halt.
It is expected that on Thursday the Office for National Statistics (ONS) figures will show that in the fourth quarter of the year GDP fell as businesses and consumers confidence plummeted in Autumn.
Should the ONS figures reveal on Thursday that GDP fell in the fourth quarter this mean the UK is ready to enter into a “technical recession” in the first quarter of this year, this will be another blow for Labour and their policies.
Paul Dales, chief UK economist at forecasters Capital Economics, said, “Higher taxes for businesses, a lingering drag from the previous interest rate hikes and softer overseas demand explain why we have revised down our UK GDP growth forecasts, from 1.3% to 0.5% for 2025 and from 1.6% to 1.5% for 2026.
“This means our forecasts have shifted from being a bit stronger than those of the consensus and the Bank of England to a bit weaker.”
The Evening Standard reported, Sanjay Rana, senior economist at Deutsche Bank said, “We expect GDP to have contracted in the fourth quarter of 2024, ending the year on a low.
“What do our models tells us? We expect disappointing monthly GDP data to continue (0% month on month) in December, with services output flatlining, and manufacturing and construction activity both declining.
“This will leave GDP shrinking in the fourth quarter – albeit marginally – coming in at -0.1%quarter on quarter. Where does this leave annual GDP growth for 2024? At a much softer 0.7% – two-tenths below our official projections at the start of the year.
“Looking ahead, downgrades to our 2025 GDP forecast are inevitable. The weaker Q4-24 and Dec-24 GDP prints will result in a large negative carry over effect into 2025, pulling down on our 1.25% growth projection for this year.
“At minimum, the mechanical shift would lower our projection by 0.25pp for the current year.”
Leave a Comment