THE growing danger of renewed recession in the UK has been underlined in the influential Organisation for Economic Cooperation and Development's (OECD) latest composite leading indicator (CLI).
The OECD declared yesterday that its leading indicator for the UK, a composite measure designed to anticipate turning points in activity, pointed to “economic activity falling below long-term trend”. Its UK indicator, which has now fallen for seven consecutive months after stagnating for five months, is declining at an accelerating pace.
The latest month-on-month fall of 0.8% in September, from 99.8 to 99.0, compared with monthly drops of 0.7% in both July and August, a fall of 0.5% in June, a decline of 0.4% in May, and dips of 0.2% in both March and April.
The OECD said yesterday: “Compared to last month’s assessment, the CLIs point more strongly to slowdowns in all major economies. In Japan, Russia and the United States, the CLIs point to slowdowns in growth towards long-term trends. In Canada, France, Germany, Italy, the United Kingdom, Brazil, China, India and the euro area, the CLIs point to economic activity falling below long-term trend.”
Its assessment is another blow to Chancellor George Osborne’s hopes that the private sector would drive economic growth as he embarked on forcing through a programme of £113 billion per annum of public spending cuts and tax hikes by 2014/15.
The UK economy has almost ground to a standstill over the past year, even before implementation of much of the public sector job cuts programme.
Howard Archer, chief UK economist at consultancy IHS Global Insight, said: “The further deterioration in the OECD leading indicator ... for the UK fuels mounting concerns that the economy is in serious danger of relapsing back into recession.
“We have forecast UK GDP (gross domestic product) growth to be limited to just 0.8% in 2012, following likely expansion of 0.9% in 2011.
“We currently expect the economy to be stagnant over the fourth quarter of 2011 and the first quarter of 2012 before returning to gradual growth, but it is very possible contraction will occur, especially if there is no significant, sustained easing in the eurozone’s sovereign debt problems.”
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