THE UK economy did not exit recession in the second quarter as had previously been predicted but is instead now stagnating, according to GDP estimates from a leading think-tank.
Figures from the National Institute of Economic and Social Research (NIESR) showed that GDP contracted by 0.4 per cent in the three months to June 2009 and it estimates that the UK economy is now stagnating rather than continuing to contract at a sharp pace.
The NIESR has had to revise downwards its output estimates for earlier months this year in light of changes to the first quarter forecast for GDP by the Office of National Statistics.
It said: “Revisions to the official estimates of economic growth in the first quarter of 2009 suggest that March can no longer be considered the trough of the recession.”
Last month the director of the NIESR, Martin Weale, estimated flat output growth in the second quarter, but downward revisions to industrial production stunted GDP forecasts.
George Buckley, chief economist at Deutsche Bank, said: “The surveys are still suggesting that growth has been negative. Even if we now get zero change for the next three months, we will still get a small growth in the third quarter, but I suspect the economy won’t rebound to anything like the level of growth that we saw before.”