With GDP growth slowing, UK faces ‘elevated’ risk of recession

Although recent business surveys have shown signs of growth in the UK economy, the country still faces a significant chance of a recession by the end of next year, the National Institute of Economic and Social Research (NIESR) said on Wednesday.

The think-tank?s latest monthly estimate of GDP suggests that output grew by 0.3% in the three months to August 2016, compared with 0.6% in the second quarter of the year.

The estimate is also lower than growth of 0.4% in the three months to July 2016.

Rebecca Piggott, research fellow at NIESR, commented: ?The evidence on the current state of the economy post-referendum is limited, but on balance these data suggest that the UK economy is in the midst of a slowdown.?

In its report, NIESR said that economic growth in the UK has been subdued this year compared to recent history, and the economy has been flat since April.

?Given this, the probability of a technical recession before the end of 2017 remains significantly elevated,? the organisation stated.

Last month NIESR predicted that UK GDP would grow by 1.7% in 2016, slowing to just 1.0% in 2017

Its quarterly report, published on 3 August, forecast ?a marked economic slowdown in the second half of this year and throughout 2017?.

Other figures released on Wednesday showed that UK manufacturing output declined by 0.9% in July 2016 compared to the previous month, largely due to a decline in pharmaceutical production. Compared to July 2015, manufacturing output increased by 0.8%, the Office for National Statistics (ONS) reported.

Discussing the monthly contraction, George Nikolaidis, senior economist at manufacturers? organisation EEF, said:

?This monthly data is hardly a meaningful indicator of the post-referendum state of the sector, with output on a rollercoaster ride since the beginning of the year. Rather, the contraction is likely to reflect an unwinding of the spectacular gains in manufacturing output during the second quarter.

?Incoming data in the next few months will help us piece together a more complete picture about the impact of Brexit-related uncertainty on manufacturing activity levels.?