Britain's double-dip recession may be erased from the history books after the Office for National Statistics said the construction industry grew more strongly than thought at the start of last year.
The UK collapsed into a second recession, using the technical definition of two consecutive quarters of negative growth, after the economy shrank by 0.1pc in the first three months of 2012.
However, the latest estimates of construction activity for the first quarter of 2012 suggest the economy only flatlined.
As a result, there may never have been a technical double dip. Philip Shaw, UK economist at Investec, said: “As things stand, the revisions to the construction data mean that the UK didn’t double dip over the back end of 2011 and beginning of 2012.
“That’s pretty interesting considering there were fears of a triple dip just a few weeks ago. If markets are concerned about the technicalities of a single dip, double dip, or triple dip, this is a relevant point.
But in the broader scheme of things, the economy is still subdued and looks like it will take some time to reach escape velocity.”
The ONS has now estimated that construction in the first quarter of 2012 contracted by 5pc, not 5.4pc, and that output in the sector was £108m more than previously thought at £25.273bn – a tiny amount that makes all the difference symbolically.
Simon Ward, Henderson’s chief economist, calculated that the revision means the economy shrank by 0.04pc in the quarter rather than 0.07pc, all else being equal.
After rounding to the statistical norm, the change means the economy stagnated at 0.0pc rather than shrank 0.1pc.
Confirmation will not come until June, when the ONS officially reviews past estimates, and any change to past calculations of services or industrial production could yet offset the gains made by construction. However, the revision will give the Chancellor a boost.
Only a few weeks ago there was talk of a triple dip, which was silenced by strong first-quarter growth of 0.3pc.
The prospect of the double dip being revised away emerged in the March construction data published by the ONS yesterday, which showed the struggling industry shrank by 2.4pc in the first quarter. The ONS said construction activity is now at its lowest level in just over 14 years.
Separate official trade figures also made for uncomfortable reading. The deficit in goods and services narrowed only slightly from £3.4bn in February to £3.1bn in March.
However, growth in exports to fast-growing markets outside the European Union helped narrow the goods deficit from £9.2bn to £9.1bn.
Exports of goods to other EU member states were flat, but sales to non-EU countries were up 10pc, while exports to the US soared 21pc from February.
Nida Ali, economic adviser to the Ernst & Young ITEM Club, said there were “signs of an initial recovery in UK trade [and] evidence that the much-needed rebalancing of UK exports towards faster growing nations is continuing”.
telegraph.co.uk
The UK collapsed into a second recession, using the technical definition of two consecutive quarters of negative growth, after the economy shrank by 0.1pc in the first three months of 2012.
However, the latest estimates of construction activity for the first quarter of 2012 suggest the economy only flatlined.
As a result, there may never have been a technical double dip. Philip Shaw, UK economist at Investec, said: “As things stand, the revisions to the construction data mean that the UK didn’t double dip over the back end of 2011 and beginning of 2012.
“That’s pretty interesting considering there were fears of a triple dip just a few weeks ago. If markets are concerned about the technicalities of a single dip, double dip, or triple dip, this is a relevant point.
But in the broader scheme of things, the economy is still subdued and looks like it will take some time to reach escape velocity.”
The ONS has now estimated that construction in the first quarter of 2012 contracted by 5pc, not 5.4pc, and that output in the sector was £108m more than previously thought at £25.273bn – a tiny amount that makes all the difference symbolically.
Simon Ward, Henderson’s chief economist, calculated that the revision means the economy shrank by 0.04pc in the quarter rather than 0.07pc, all else being equal.
After rounding to the statistical norm, the change means the economy stagnated at 0.0pc rather than shrank 0.1pc.
Confirmation will not come until June, when the ONS officially reviews past estimates, and any change to past calculations of services or industrial production could yet offset the gains made by construction. However, the revision will give the Chancellor a boost.
Only a few weeks ago there was talk of a triple dip, which was silenced by strong first-quarter growth of 0.3pc.
The prospect of the double dip being revised away emerged in the March construction data published by the ONS yesterday, which showed the struggling industry shrank by 2.4pc in the first quarter. The ONS said construction activity is now at its lowest level in just over 14 years.
Separate official trade figures also made for uncomfortable reading. The deficit in goods and services narrowed only slightly from £3.4bn in February to £3.1bn in March.
However, growth in exports to fast-growing markets outside the European Union helped narrow the goods deficit from £9.2bn to £9.1bn.
Exports of goods to other EU member states were flat, but sales to non-EU countries were up 10pc, while exports to the US soared 21pc from February.
Nida Ali, economic adviser to the Ernst & Young ITEM Club, said there were “signs of an initial recovery in UK trade [and] evidence that the much-needed rebalancing of UK exports towards faster growing nations is continuing”.
telegraph.co.uk
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