News - Economics / markets
Economists have warned the UK could suffer a triple-dip recession next year after the recovery effects of the Olympics wear off.
They fear the eurozone crisis and a Greek exit early next year could push the country back into recession next spring, the Sunday Times reports.
Their warnings comes despite ratings agency S&P's decision to retain the UK's prized AAA credit rating as it expects the economy to return to growth next year.
The Sunday Times reports many economists have been downgrading their forecasts for Britain following shock data released by the ONS last week. This showed the sharpest quarterly decline in UK GDP since the first three months of 2009. The recession is now the longest since records began in the 1950s.
Azad Zangana at Schroders predicts GDP will bounce by 0.5% in the current quarter, following the 0.7% decline from April to June.
The economy will continue to grow until March, he said, before two consecutive quarters of negative growth, the Sunday Times reports.
"A renewed crisis in the eurozone will lead to a further collapse in business confidence and investment," Zangana said.
Meanwhile, Michael Saunders at Citigroup thinks GDP will grow only 0.3% in 2013 - down from his previous forecast of 0.5% - with the risk of a triple dip.
"My guess is that for the next few quarters, after a technical bounce in the third quarter, the economy will be roughly flat, which I would describe as a disastrously bad outcome compared with previous cycles," Saunders said.
Only a quarter of people surveyed in a Sunday Times poll last week believe the government is handling the economy well, with 28% saying the coalition should stick to its current austerity strategy. Around half (45%) would like to see growth given priority instead.
Despite the concerns over the economy, the Bank of England is thought unlikely to approve more quantitative easing or a cut in interest rates at its monetary policy committee meeting on Thursday.
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