London: The UK economy probably contracted for a third consecutive quarter in the three months through June as a double-dip recession deepened, economists said.
Gross domestic product (GDP) fell 0.2 per cent, according to the median estimate of 36 economists in a Bloomberg News survey. It shrank 0.3 per cent in the first quarter and 0.4 per cent in the last three months of 2011. The Office for National Statistics will publish the data on Wednesday.
The Bank of England expanded its emergency bond-purchase programme this month and introduced measures to boost lending. The International Monetary Fund (IMF) said this week that the recovery has “stalled” and the government may need to consider easing its budget squeeze if central bank efforts fail to help the economy gather momentum.
“Tight fiscal policy and still significant problems for consumers” will “limit UK economic activity,” Howard Archer, an economist at IHS Global Insight in London said. “Ongoing Eurozone sovereign debt problems and weakened economic activity are expected to continue to weigh down on UK recovery prospects.”
From a year earlier, the economy probably shrank 0.3 per cent in the second quarter, according to a separate Bloomberg survey. Activity in the quarter was probably affected by the extra public holiday for the Queen’s Jubilee in June.
Bank of England policy makers expanded stimulus by £50 billion (Dh268.88 billion) to £375 billion on July 5. In the minutes of the meeting, they said they may review the merits of cutting their benchmark interest rate, currently at a record-low 0.5 per cent.
BNP Paribas SA forecast yesterday that the central bank will lower the key rate by 25 basis points in November and increase its bond programme by another £50 billion.