Belfast Telegraph

Fears grow over slowdown in economic recovery

By Jamie Grierson

A leading think-tank has underlined the fragile state of the UK recovery, revealing a sharp slowdown in growth in the last three months.

The National Institute of Economic and Social Research (NIESR) said its monthly estimates suggest gross domestic product (GDP), grew at 0.2% in the three months to August, compared with 0.6% in the quarter to July.

NIESR warned that the rate of growth was "flattered" by May's recovery. The Bank of England is likely to inject more cash into its quantitative easing programme if the weakness persists.

The figures come after the Chancellor, George Osborne, suggested official forecasts for the British economy will be downgraded later this year after a slew of poor data.

Lacklustre manufacturing growth, a contraction in the key services sector and a stock market bloodbath all suggest the UK is moving towards a double-dip recession.

The UK economy grew at a tepid 0.2% in the second quarter, according to figures from the Office for National Statistics, and the NIESR report suggests the recovery is failing to take off. The body said UK output will remain in depression - that is below its early 2008 peak - for some time, probably until 2013.

The Bank is under pressure to increase its quantitative easing programme from £200bn. However, further QE could trigger a rise in the rate of inflation, which, at 4.4%, is already more than twice the Government's 2% target.