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Here’s your Cheat Sheet to this week’s top econ stories:
Is Britain’s Economy Triple Dipping?
Lower production output from oil producers in the North Sea and manufacturers has brought Great Britain close to its third recession in four years.
During the last three months of 2012, the economy shrank more than expected, with fourth quarter Gross Domestic Product falling 0.3 percent, according to Britain’s Office for National Statistics. This fall was greater than the 0.1 percent decline analysts had predicted, and it appears to be a sign of further bad news to come. The International Monetary Fund cut its 2013 forecast for economic growth to 1.0 percent from the 1.1 percent that was predicted last October.
The tougher-than-anticipated economic situation will have political ramifications as well. As Reuters reported, the lowered prospects will put pressure on the coalition of Conservatives and Liberal Democrats to ease back on deficit-cutting measures. Only a day before the figures were released, the Conservative-led government fended off criticism from the IMF regarding its austerity plan.
The British economy has contracted 3.3 percent since the first quarter of 2008, helped along by a mild recession that took place from late 2011 to the middle 2012.
A 10.2 percent quarterly drop in mining and quarrying production, which eliminated 0.18 percent of GDP, contributed to the drop, as did falling factory output. Industrial output was down 1.8 percent and Britain’s service sector remained flat.
Contrasting to the IMF’s assessment, the Governor of the Bank of England, Mervyn King, has said he predicts no more than a “gentle recovery” this year, according to Reuters. But even slow growth could be hindered if the talk of a triple-dip recession hurt consumer and business confidence.
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