The Organisation for Economic Co-operation and Development (OECD) is saying that there will be an annualised contraction of 0.4 per cent for GDP, suggesting a 0.1 per cent contraction compared with the previous quarter.
However, figures from the Office for National Statistics (ONS), out last week, show that the UK service sector, which accounts for around 75 per cent of the UK economy, grew 0.2 per cent in January alone.
Governor of the Bank of England, Sir Mervyn King, foresees a ‘zig-zag’ pattern, predicting that the economy will continue to fluctuate between positive and negative growth throughout the year, as it has been since the middle of 2010.
And according to the CBI, “growth will restart in 2012, but high levels of uncertainty around the economic outlook, mainly driven by the situation in the euro area, mean growth will remain subdued, particularly in the first half of this year.”
Analysts are divided on the matter. Howard Archer at IHS Global Insight said: "While services output was hardly spectacular in January, it was a solid enough performance after a decent gain in December and supports hopes that the economy has returned to growth in the first quarter."
But David Blanchflower writing in The Independent today believes the OECD, saying: “A big day on the economic calendar will be 25 April when the first estimate of GDP growth for Q1 2012 is released. I also expect the number to be negative.”
Speaking of the OECD’s prediction, Chancellor George Osborne said: "This is a forecast... Our own forecast from our own independent body, which we published last week, says we are going to avoid a recession."
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