Yesterday’s news that NIESR is forecasting growth of only 0.1% in the second quarter reminds us of quite how bad things currently are in the UK. The Sunday’s David Smith has today referred to growing talk in the City that the number may even be negative.
This is all a far cry from the situation only 6 months ago – before the shock decline in Q4 2010 GDP was reported at the end of January.
Whilst there is now a very high chance that overall GDP growth in 2011 may come in at under 1%, only six months ago the average independent forecast was for growth of 2%.
This chart from HM Treasury’s monthly round up of forecasts shows how the picture has developed in recent months. It plots the average forecast for 2011 growth over the past 18 months – since January it has been nose diving.
The questions now are how low will it go? And what will this do to the deficit?