The think tank’s estimate comes after figures from the Office for National Statistics (ONS) showed industrial output to have fallen by 0.7 percent in October, raising concerns that the country may be sliding into recession.
Most economists believe that the UK may be heading for at least one quarter of contracting economic output, if not an outright recession, which is commonly defined as two consecutive quarters of negative growth. NIESR says that it interprets the term "recession" to mean a period when output is falling or receding, while "depression" is a period when output is depressed below its previous peak.
The report also calls for further economic stimulus in the UK, saying: “these data lend support to the further loosening of UK monetary policy." They also stated that they don’t expect output to pass its peak of early 2008 until 2013.
The Bank of England will meet today for its monthly policy meeting and will be under pressure to increase its stimulus package. Apart from the report from NIESR, the British Chambers of Commerce (BCC) has called for a further £50bn of quantitative easing.
David Kern, Chief Executive of the BCC, said: “The disappointing forecast ... with a prediction of negative growth in the current quarter, shows how important it is for the government to introduce measures which will help to stimulate the economy."
However, most economists don’t expect the Bank to agree on more quantitative easing at this month’s meeting but they do predict that a further amount will be injected in February when the current £75bn, launched in October, will be complete.
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