UK growth ‘firming’, says OECD

The OECD’s composite leading indicators (CLIs), which have a good track record for predicting changes in economic conditions about six months in advance, “point to economic growth firming” in the UK, the Paris-based think-tank said.

The CLIs have now indicated that growth in the UK is starting to accelerate for the last five months, although in the August and September releases the improvement was only “tentative”, reports The Telegraph.

However, fears that the UK is heading back towards recession heightened last week when official figures showed that activity at factories collapsed at the start of this quarter.

Economists cautioned that with services only growing very slowly as well, the drag from production could tip fourth quarter GDP growth back into negative territory.

Howard Archer at IHS Global Insight, said: “While the OECD leading indicator supports hopes that the UK can achieve gradually improving growth in 2013, the fact is that latest surveys and data have been largely disappointing and it currently looks more likely than not that the UK will suffer a renewed dip in GDP in the fourth quarter following the 1.0pc quarter-on-quarter rebound in the third quarter.

“We currently expect a 0.2pc quarter-on-quarter fall in GDP in the fourth quarter, but much could yet depend on how much consumers spend over Christmas.”

If the economy shrank in this and the next quarter, that would mean it has “triple-dipped” back into a recession, defined as two consecutive quarters of negative growth.

Last week, Chancellor George Osborne said in a bleak Autumn Statement that weakening economic growth meant the era of austerity would be extended for another year to 2018.