Brace yourself. The latest forecast from the National institute of Economic and Social Research (NIESR) has estimated that the UK economy shrank by 0.1% in the three months to the end of February, which compounds the 0.3% contraction that had already been recorded for the final quarter of 2012.
NIESR has predicted that this, along with disappointing manufacturing output data and the crashing pound, could be the last straw for pushing the UK back into recession – and that would be the third time since 2008.
The pound also fell to a two-and-a-half-year low today thanks to the manufacturing data, and this was just after industrial production between December and January was shown to have declined by 1.2%. However, this was mainly down to the closure of some major North Sea oil platforms, which are a one off ‘hit’ to the figures.
Nonetheless, none of the data are really positive, and with just days to go before chancellor George Osborne is due to deliver his budget, he really could do with some positive-sounding stats appearing from somewhere.
Still, there was a shred of good news about the economy today, which was a slight narrowing of the trade deficit from £8.73bn in December to £8.19bn. The trade deficit is the amount by which UK imports exceed exports, and the narrower the gap, the better for the UK economy. This is the lowest the deficit has been since July last year.
But let’s not get too comfortable. It’s worth remembering that the last time NIESR made a claim like this, it was to predict a double-dip, back in 2011. And it was right.