According to a recent Reuters poll, Britain currently faces a 33% chance of recession during the next year. Even if the country does not enter a recession, a best case scenario would still have Britain facing several quarters of slowed economic growth. This news comes a week after the Bank of England fulfilled their promise to initiate a new batch of asset purchases designed to stimulate a sluggish economy.
Nonetheless, professional analysts participating in the Reuters poll still believe that Britain’s economy has a somewhat pessimistic outlook for the remainder of 2011 and possibly the entirety of 2012. In fact, the forecast is only gradually getting worse, with the current expected economic growth rate for the fourth quarter of 2011 being 1.0%, and the projected economic growth rate of 2012 being 1.3%, whereas surveys taken in September predicted slightly higher economic growth rates of 1.1% for the last quarter of 2011 and 1.5% for the entirety of 2012.
If such sluggish growth rates become a reality, many of the government’s budget-cutting efforts (which have primarily been based on more optimistic economic reports from March of 2011) could be significantly undermined. Even as unemployment rates continue to rise and the economy struggles under the recent implementation of massive fiscal austerity measures, it still appears that the sovereign debt crisis of the eurozone poses a more serious short-term threat.
With the economy growing at only 0.1% between April and June, Bank of England chief economist, Spencer Dale, recently predicted that the growth rate would only slow even more before the end of 2011. In the recent Reuters survey, six of the 29 participants that offered quarterly growth forecasts predicted that there would be at least one quarter of negative economic growth before mid-2013, compared with just one analyst holding that opinion in the previous September survey.