Double-dip recession unlikely, say experts

BRITAIN looks on course to narrowly avoid its first double-dip recession since the 1970s and recover sooner than first feared, suggests an economic think tank.

The EY Item Club believes the economy flatlined in the final quarter of 2020 rather than contracted, thanks to a resilient performance during the November lockdown. While the latest, tougher lockdown is set to see output fall sharply in the first quarter of 2021, the Item Club said that the absence of a contraction at the end of last year will see the UK avoid a muchfeared double-dip recession.

A recession is defined by two quarters in a row of falling gross domestic product (GDP) – a measure of the size of the economy. Despite a contraction of between 3 per cent and 4 per cent due in the first three months of 2021, the Item Club believes the prospects for recovery are “looking brighter”.

It will also mark a far less severe hit than in the first lockdown when second quarter GDP plunged 18.8 per cent. The think tank’s chief economic adviser Howard Archer said: “The UK economy has demonstrated remarkable resilience in recent months and the impact of recent lockdowns has been nowhere near what we saw in April.

“The combination of vaccines, a UK-EU trade deal and previous lockdown experience means there’s much less uncertainty. Excluding the first quarter, the UK is looking at two years of strong growth.”