The slowest recovery in over 100 years appears to be getting even slower. Final GDP figures for the last quarter of 2012 confirmed that the UK economy shrank by 0.3%. The current-account deficit for 2012 as a whole hit 3.7% of GDP, a 25-year high.
In March, the Confederation of British Industry’s gauge of high-street activity fell back to its lowest level since last August. DIY giant Kingfisher posted its first annual profit decline in five years. If the economy shrinks for a second successive quarter between January and March 2013, we will officially have entered a third recession in five years – an unprecedented triple-dip.
What the commentators said
Kingfisher “failed to sell enough barbecues” in last summer’s downpours, said Alex Brummer in the Daily Mail. You’d think stores would have learned to respond to “the caprices” of our climate by now. But expect more weather-related excuses from fashion groups trying to sell “flimsy spring pastels” in blizzards.
The factory shutdowns and empty malls caused by the snow could make the difference between growth or contraction this quarter, analysts reckon, given that the economy was barely growing before the weather worsened. But whether we are just above or below the zero line is less important than whether we can look forward to a sustained rebound soon.
The short answer is no. The current-account figures “show that we’re still terrible at exporting”, said Alan Clarke of Scotiabank. With our key overseas market, the eurozone, in recession, “a weaker pound isn’t going to help much”. On the domestic front, consumption will remain lacklustre.
There was little in the Budget to support consumers, whose pay is growing only very slowly, said Capital Economics. Inflation, meanwhile, has been on the rise again. “The squeeze on real pay is likely to persist into 2014.” Expect real household spending to stagnate this year. The overall growth outlook remains “dismal”.