UK on triple-dip recession alert
A triple-dip recession alert has been issued in the City after falling oil and gas production in the North Sea plunged industry output to its lowest in 20 years.
The coalition’s hopes of economic recovery were destroyed yesterday after the less than positive official data was received.
The crisis-stricken Eurozone has slashed its demands, which inevitably affected UK exporters and manufactory production, seeing a drop of 1.3% last October.
Even Germany, the biggest economy in Europe, has reported a struggling manufacturing sector.
Financial markets were cautiously optimistic for UK industrial production, hoping for a healthy rise in October. However, the Office for National Statistics reported a 0.8% drop in output to a level comparable to the early 1990s recession.
David Kern, chief economist at the British Chambers of Commerce, confirmed: “The decline in manufacturing was much larger than expected. The wider industrial production figures were also bleak, with a decline of 0.8% instead of the increase that was anticipated.”
Michael Saunders, UK economist at Citibank, gave a similar economic forecast, saying: “Early data suggest the UK is heading for a ‘treble dip’, with GDP shrinking again in the fourth quarter of 2012. We expect the economy will continue to underperform the OBR’s forecasts in 2013-14, leading to further sizeable revenue shortfalls and deficit overshoots.”
Saunders added his concerns over the UK’s AAA rating, saying: “We have argued for a while that the UK will lose its AAA rating in the next two to three years and it now seems likely that this will happen in the next 12-18 months”.
David Cameron, speaking from the Midlands, said the British economy was being faced with a lack of competitiveness hampered by a skills deficit.
The PM urged schools and colleges to take a “more Germanic approach”, trying to understand as quickly as possible what skills would be the most sought after for the next generation of workers.
Chuka Umunna, the shadow business secretary, pointed out that George Osborne was wrong to say that Britain was on the verge of recovery.
“Osborne says the economy is healing but yesterday we learnt the trade deficit has grown, today that manufacturing fell by 2.1% on the year.”