Britain is in double-dip recession, warn economists

BRITAIN could already be back in recession, according to two economic think tanks, which say that the country's gross domestic product fell in the final quarter of last year and will do so again in the first three months of 2012.
 
The warnings come from what The Guardian calls "two highly regarded economic forecasters", the Ernst & Young Item Club and the Centre for Economics and Business Research (CEBR).
 
The CEBR report is particularly gloomy. Last year it predicted that the UK economy would expand by just 0.7 per cent in 2012; now the body believes there will be a 0.4 per cent reduction.
 
The Daily Telegraph highlights the think tank's warning that "a still more painful contraction of 1.1 per cent looms if developments in the eurozone take a sharp turn for the worse".
 
The double-dip recession will also force the Bank of England to keep interest rates at the historic low of 0.5 per cent, where they have been for almost three years. The CEBR believes that the rate could remain at that level for another four years.
 
The Item Club's forecast is also grim. It says that the country is already in a recession, defined as two consecutive quarters of negative growth. It predicts that the economy could grow by 0.2 per cent this year, but only if the eurozone crisis is solved. Unemployment is also tipped to rise by 300,000 to just under 3 million.
 
"The forecaster called on UK exports to find new markets for their products and stop relying on European economies," reports the BBC. Both the CEBR and the Item Club say the situation in Europe is crucial to the economy's prospects.  
 
A third piece of bad news for the UK came from Chartered Institute of Personnel and Development, which said that unemployment would stay above 2.5 million until at least 2016, and would peak at 2.9 million next year. ·