The UK economy has avoided a double-dip recession by the narrowest of margins, a leading thinktank predicted after a manufacturing slump underscored the fragile nature of Britain's recovery.
The economy grew just 0.1% in the first quarter of this year, according to the National Institute of Economic and Social Research (NIESR).
If correct, its estimate would mean that after a drop in GDP at the end of last year, the UK skirted a recession, which is technically two consecutive quarters of contraction.
The thinktank's forecast followed official data revealing a surprise fall in factory output in February.
Contrasting with the upbeat tone of recent business surveys, manufacturers suffered a 1% drop in production, the sharpest fall since April last year when an extra royal wedding bank holiday and the Japanese tsunami disrupted business.
On the year, output was down 1.4%, way off economists' forecasts for a rise of 0.1% in both monthly and annual terms. The Office for National Statistics also revised January's performance lower, casting doubts over hopes that overall economic growth bounced back strongly in the first quarter.
"February's terrible industrial production figures put something of a dent in hopes of a decent increase in GDP in the first quarter," said Samuel Tombs, economist at Capital Economics.
"Output has now fallen in four of the last five months, in contrast to the expansionary picture painted by the surveys … Hopes that manufacturing could help to drive a strong and sustained recovery in the economy are rapidly fading."
The news was a blow to the government as it looks to manufacturers to kickstart Britain's economic recovery and take on a bigger role in the economy, from the mere 10% they make up now.
The ONS said the wider industrial sector, which also includes utilities and mining, fared better in February when cold weather boosted oil, gas and electricity demand. Industrial output rose 0.4% on the month, slightly ahead of forecasts for a 0.3% rise.
The official numbers are at odds with stronger-than-expected surveys from businesses this week. The closely watched PMI (purchasing managers' index) reports signalled a pickup in activity last month.
That prompted some economists to predict first-quarter GDP growth was as strong as 0.5%, more than making up for a 0.3% decline at the end of the last year. The first official estimate of GDP for January to March is released on 25 April.
The manufacturers' organisation, the EEF, said it still expected some growth in the sector for the first quarter as well as modest overall economic growth.
"But the latest data do highlight that we can't take any recovery for granted and that there are a lot of challenges still facing the economy, not least from Europe," said EEF economist Andrew Johnson.
With the outlook for the UK remaining choppy, economists are divided over whether the Bank of England will expand its money-printing programme – known as quantitative easing (QE).
The Bank made no change to policy at the end of its monthly meeting on Thursday, leaving interest rates at their record low of 0.5% and QE at £325bn.
guardian.co.uk
The economy grew just 0.1% in the first quarter of this year, according to the National Institute of Economic and Social Research (NIESR).
If correct, its estimate would mean that after a drop in GDP at the end of last year, the UK skirted a recession, which is technically two consecutive quarters of contraction.
The thinktank's forecast followed official data revealing a surprise fall in factory output in February.
Contrasting with the upbeat tone of recent business surveys, manufacturers suffered a 1% drop in production, the sharpest fall since April last year when an extra royal wedding bank holiday and the Japanese tsunami disrupted business.
On the year, output was down 1.4%, way off economists' forecasts for a rise of 0.1% in both monthly and annual terms. The Office for National Statistics also revised January's performance lower, casting doubts over hopes that overall economic growth bounced back strongly in the first quarter.
"February's terrible industrial production figures put something of a dent in hopes of a decent increase in GDP in the first quarter," said Samuel Tombs, economist at Capital Economics.
"Output has now fallen in four of the last five months, in contrast to the expansionary picture painted by the surveys … Hopes that manufacturing could help to drive a strong and sustained recovery in the economy are rapidly fading."
The news was a blow to the government as it looks to manufacturers to kickstart Britain's economic recovery and take on a bigger role in the economy, from the mere 10% they make up now.
The ONS said the wider industrial sector, which also includes utilities and mining, fared better in February when cold weather boosted oil, gas and electricity demand. Industrial output rose 0.4% on the month, slightly ahead of forecasts for a 0.3% rise.
The official numbers are at odds with stronger-than-expected surveys from businesses this week. The closely watched PMI (purchasing managers' index) reports signalled a pickup in activity last month.
That prompted some economists to predict first-quarter GDP growth was as strong as 0.5%, more than making up for a 0.3% decline at the end of the last year. The first official estimate of GDP for January to March is released on 25 April.
The manufacturers' organisation, the EEF, said it still expected some growth in the sector for the first quarter as well as modest overall economic growth.
"But the latest data do highlight that we can't take any recovery for granted and that there are a lot of challenges still facing the economy, not least from Europe," said EEF economist Andrew Johnson.
With the outlook for the UK remaining choppy, economists are divided over whether the Bank of England will expand its money-printing programme – known as quantitative easing (QE).
The Bank made no change to policy at the end of its monthly meeting on Thursday, leaving interest rates at their record low of 0.5% and QE at £325bn.
guardian.co.uk
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