NIESR Reports UK Recession Over, Economic Recovery Underway

By: Nadeem_Walayat

The mainstream 'respected' forecasting organisation, the National Institute of Economic and Social Research (NIESR) reported earlier today that it believed that Britain's economic depression bottomed in March and that economic output across the economy rose in April 09 by 0.2% and by 0.1% in May 2009, which follows my own analysis of a stabilising economy a week ago which was also emailed to the NIESR forecasting organisation.

Today's NIESR announcement's outlook is inline with my own analysis of the past 2 months that has been increasingly suggestive of a bounce in the UK economy right from the birth of the stocks stealth bull market in Mid March, to the UK housing market "temporary" bounce of Mid May followed by the 3rd of June in-depth analysis that confirmed that the UK economy is set for a debt fuelled bounce into the May 2010 General Election and concluded :

Total GDP contraction to date now stands at -4% on a quarter on quarter basis, which is against my forecast for -6.3% total into Q3 2009, which strongly suggests that GDP contraction during the 2nd and 3rd quarters for 2009 'should' moderate i.e. we are unlikely to see another figure as bad as 1st Q -1.9%, more probably the 2nd quarter GDP is likely to be at -1%. Whilst a strong bounce back in the economy is expected going into the 2010 election given the extreme measures adopted most notable illustrated by the £500+ billion budget deficit to generate just £67 billion of additional economic growth, however the post general election tax hikes and deep public spending cuts will in all likelihood trigger a double dip recession during 2011 to 2012 as illustrated by the below graph. Therefore my growing expectations are for GDP contraction that is marginally less than the forecast -6.3%, which also implies stronger growth during 2010, which will not be sustained during 2011 and beyond.

Though the NEISR's most recent press release of May 6th 2009, differs against my earlier analysis as the NEISR is forecasting GDP contraction of 4.3% for 2009 and 0.9% growth for 2010, which will now probably be revised higher during future press releases and is set against my own forecast for GDP approaching +3% in 2010.

I aim to publish a further update to the bounce in the UK housing market later today, as well as an in-depth update the UK interest rate forecast of December 2008 that called for UK interest rates to start rising during the second half of 2009 as illustrated by the graphs below. To receive the in-depth analysis in your email box, make sure your subscribed to my always free newsletter.

By Nadeem Walayat
http://www.marketoracle.co.uk

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Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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