Simon French, chief economist at Panmure Gordon, says Yes.
Avoiding a recession is now the number one challenge facing our economic policy-makers. Despite a base rate at 0.5 per cent and public sector deficit still in excess of 4 per cent of GDP, the Bank and the Treasury still possess a well-resourced policy arsenal. Nimble use of munitions can provide a shot in the arm, supplementing the positive impact of a sharply lower currency. Mark Carney unveiled support for domestic credit markets and helped ease liquidity pressures. This is set to be buttressed by an interest rate cut next week. His challenge is that he stands alone on the bridge of HMS UK. The chancellor has ruled out substantial tax and spending changes until a new Prime Minister is appointed – a mistake, with austere fiscal plans still in place and 10-year gilt yields at just 0.8 per cent. Small businesses and working households are the real heroes in this economy and will strive to hold their nerve against a backdrop of negative sentiment. It is their resilience and endeavour that helps make the UK an economic powerhouse. They deserve better government support at times such as these.
Oana Aristide, chief economist at Dun & Bradstreet, says No.
We’re still mostly flying blind in terms of post-referendum economic data, but anecdotal evidence from the financial and real estate sectors points unequivocally to slower growth in the second and third quarters of this year. We expect a technical recession in the second half of 2016 to the first half of 2017, meaning at least two consecutive quarters of negative growth. Firms are postponing investment, hiring plans are being put on hold, and consumers are pulling out of house purchases. When economists speak of business and consumer sentiment, often these are abstract concepts. But in this instance, the deterioration is almost palpable. People are afraid. The uncertainty behind the drop in confidence won’t lift before 2017, and may persist until 2018 and beyond. This might be a very London-centric assessment but, given its weight in the UK economy, and the degree to which waning investor sentiment from abroad will impact on companies throughout the country, we believe the impact will be national and severe.