Britain’s manufacturing sector will shrink for the first time in three years in 2012, as official figures are expected to show Britain was locked in recession in the second quarter.
Manufacturing output will fall by 0.3pc as the eurozone crisis continues to weigh on trade and exports, according to EEF, the manufacturers’ organisation. It would be the first annual fall since 2009.
The group is forecasting just 0.2pc growth for the economy in 2012, in line with the International Monetary Fund’s view.
EEF said that an exit from the single currency of one or more countries remained a “distinct possibility”, in which case the sector and the economy overall would be much harder hit. Under this scenario, GDP in the UK would fall by 0.7pc this year and 3.6pc in 2013.
It would take another four years before GDP returned to pre-crisis levels.
Manufacturing would suffer as world trade declined. Lee Hopley, chief economist at EEF, said: “The estimate for second quarter growth is again unlikely to flatter the UK’s economic performance.
But the bigger question is where we go from here. Our forecast scenarios show the importance of bringing greater confidence and certainty to the private sector. The rebalancing process would be kick-started if firms were to push ahead with investment plans.
”Separate figures from think tank IPPR suggest the UK is set to lose £165bn of economic output by 2015 due to tax rises and spending cuts.
It comes as the first official estimate of GDP on Wednesday is expected to show the economy shrank by at least 0.2pc in the second quarter of the year.
This would mark the third successive quarter of contraction and pile more pressure on Chancellor George Osborne, who has come under attack from business and economists for lacking vision to boost the ailing economy.
Activity was held back by additional bank holiday given for the Queen’s Diamond Jubilee celebrations, which caused a loss of output, as well as unseasonably wet weather.
The Office for National Statistics data is likely to show a sharp fall in construction output between April and June, as well as a decline in industrial output and little, if any, growth in Britain’s dominant services sector.
Figures for the spending side of the economy will be published in later estimates.
EEF is forecasting a slightly better second half of the year for the manufacturing sector, which should improve further in 2013.
Similarly economists expect the economy to pick up in the second half of year, with a boost from the Olympics in the third quarter and a bounce back from the “Jubilee effect”.
A survey by Markit showed that British households were the least pessimistic about their household finances since April 2010 in July, as falling inflation provided some cause for cheer.
However, Tim Moore, senior economist at Markit, said consumers were still facing difficulties. “Job insecurities and lower incomes are crimping underlying consumer demand, which adds to recent gloom over the wider UK economic outlook,” he said.
telegraph.co.uk
Manufacturing output will fall by 0.3pc as the eurozone crisis continues to weigh on trade and exports, according to EEF, the manufacturers’ organisation. It would be the first annual fall since 2009.
The group is forecasting just 0.2pc growth for the economy in 2012, in line with the International Monetary Fund’s view.
EEF said that an exit from the single currency of one or more countries remained a “distinct possibility”, in which case the sector and the economy overall would be much harder hit. Under this scenario, GDP in the UK would fall by 0.7pc this year and 3.6pc in 2013.
It would take another four years before GDP returned to pre-crisis levels.
Manufacturing would suffer as world trade declined. Lee Hopley, chief economist at EEF, said: “The estimate for second quarter growth is again unlikely to flatter the UK’s economic performance.
But the bigger question is where we go from here. Our forecast scenarios show the importance of bringing greater confidence and certainty to the private sector. The rebalancing process would be kick-started if firms were to push ahead with investment plans.
”Separate figures from think tank IPPR suggest the UK is set to lose £165bn of economic output by 2015 due to tax rises and spending cuts.
It comes as the first official estimate of GDP on Wednesday is expected to show the economy shrank by at least 0.2pc in the second quarter of the year.
This would mark the third successive quarter of contraction and pile more pressure on Chancellor George Osborne, who has come under attack from business and economists for lacking vision to boost the ailing economy.
Activity was held back by additional bank holiday given for the Queen’s Diamond Jubilee celebrations, which caused a loss of output, as well as unseasonably wet weather.
The Office for National Statistics data is likely to show a sharp fall in construction output between April and June, as well as a decline in industrial output and little, if any, growth in Britain’s dominant services sector.
Figures for the spending side of the economy will be published in later estimates.
EEF is forecasting a slightly better second half of the year for the manufacturing sector, which should improve further in 2013.
Similarly economists expect the economy to pick up in the second half of year, with a boost from the Olympics in the third quarter and a bounce back from the “Jubilee effect”.
A survey by Markit showed that British households were the least pessimistic about their household finances since April 2010 in July, as falling inflation provided some cause for cheer.
However, Tim Moore, senior economist at Markit, said consumers were still facing difficulties. “Job insecurities and lower incomes are crimping underlying consumer demand, which adds to recent gloom over the wider UK economic outlook,” he said.
telegraph.co.uk
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