GDP figures will reveal recession picture

SHOULD the GDP news from the Office for National Statistics this morning be negative and a “triple dip recession” confirmed, pressure will mount on Chancellor George Osborne to find a plan B for the faltering economy.

Last week the International Monetary Fund urged the Treasury to consider scaling back the austerity programme because of weakness in the economy.

A poll of economists by the news agency Reuters estimates that the economy may avoid a triple dip by the skin of its teeth, with growth of 0.1% in the first three months to March.

But with a margin this slim, a negative number would not be a huge surprise bearing in mind the fact that the economy shrank by 0.3% in the last three months of 2012.

The domestic economy has been much slower to recover from the financial crisis than many others. At the end of 2012 its GDP was still nearly 3% smaller than before the crisis.

Weak demand from a recession-hit euro zone, a drag from the government’s deficit-reduction measures and high inflation eating into meagre wage rises are all to blame.

Furthermore, the global economy is weakening and there are signs of slowing growth in the US and China.

The performance of the economy in the first quarter hinges largely on whether the dominant services sector – which had a strong January – was hit hard by rare March snow.

Industrial output is expected to have been broadly flat, while the construction sector is likely to have contracted.