Sluggish growth as good as it gets, says Capital Economics
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A decent rise in GDP for the second quarter will be as good as it gets for this recovery, says Capital Economics.
Following the announcement of today’s GDP figures remaing stable with a 0.3% rise a Capital Economics survey suggesting a stronger rise of 0.5% or 0.6% in the second quarter.
In today’s Office of National Statistcis figures the firm believes the 0.2% rise in services output is offset by poor results in construction and the figures highlight the fragility of the recovery seen so far.
Vivky Redwood, senior UK economist at Capital Economics, says: “We continue to expect the UK economy to grow by just 1.5%or so next year and by about 2% in 2012.
“We still doubt that the economy is in good enough shape to withstand the fiscal squeeze that is about to start in earnest.”
She adds that government spending is now estimated to have provided a bigger boost to GDP in the first quarter than previously thought – and obviously this support is soon set to fade.
