Economy expands again

Even while the economy was in the depths of recession in 2009, speculation centred on what sort of recession it might be, with one phrase being “double dip” – the notion that after a brief recovery, the economy would slump again.

Such fears rose when official data for the final quarter of 2011 showed a contraction in gross domestic product (GDP) of 0.5 per cent.

At the time, this was attributed by the Office for National Statistics (ONS) to the severe winter weather in December, as this had held up much economic activity, not least at a time when the streets would normally be thronged with Christmas shoppers.

However, the ONS said at the time that the level of growth would have been “flat” without the weather factor and this may be noted when taking into account new figures out today (April 28th), indicating there was a 0.5 per cent expansion of the economy in the first three months of 2011.

Although this means a double-dip has been avoided, those needing debt help may be concerned that the growth only matches the contraction of the last three months.

Notwithstanding the fact that the GDP figures are often revised as the ONS receives more accurate information, this would indicate the economy has had no net growth over the past six months.

And for those struggling financially, the situation may not improve as fast as hoped in the months ahead either.

Commenting on the news, Royal London Asset Management economist Ian Kernohan said the growth outlook for the remainder of 2011 is “somewhat weaker than the three to four per cent which normally occurs in the second year of a recovery.”

Posted by Paul Thacker