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So the economy contracted 0.2% in the last three months of 2011 - BCC predicts that growth will be flat this year, with one quarter of contraction, but says a full-blown recession is not inevitable if the government acts.

It seems that the order book expectations at home and overseas are set to fall in the manufacturing sector, while unemployment will hit 2.77 million by the end of 2012, up from 2.64 million in the last official figures, the BCC added. But John Longworth, BCC director general, said that while a slowdown in the eurozone is inevitable, Britain "need not suffer a similar fate".
 
UK recession
 


"A new recession is not a foregone conclusion," he said. "However, action is needed urgently to tackle short-term stagnation and a lack of business confidence, damaged by the ongoing eurozone crisis."

The BCC's views echo those of the Bank of England, which forecast a heightened risk of recession in the first half of 2012 in its last quarterly report, as well as numerous downbeat predictions from the likes of the Office for Budget Responsibility (OBR), Organisation for Economic Co-operation and Development (OECD) and National Institute of Economic and Social Research (NIESR).

If we assume for now that the fourth quarter of 2011 will remain negative, the question is whether the first three months of 2012 will show growth or contraction. There has been talk of the economy going into 2012 with positive momentum and there is some evidence for this.

The services sector, which accounts for more than 70% of the economy, showed zero growth in the fourth quarter, but that is not the whole story. The Office for National Statistics (ONS) publishes a monthly Index of Services, the November figures for which came out with the GDP data.  It showed that in October, the service sector contracted by (a revised) 0.6%, while in November it grew by 0.6%.

It is rather difficult to find anybody right now that can predicting very much growth for the first three months of 2012.

Links:  Guardian   BBC

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