Economic advisors across the country are beginning to look at the emerging trends for the start of 2013 and predict contraction in the economy. This is worrying news for the chancellor, George Osborne, for whom a triple dip recession would be extremely embarrassing.
The last three months of 2012 are expected to have shown negative economic growth after the good summer that Britain had, with the Olympics and the Diamond Jubilee pushing up economic activity. However, the first three months of 2013 were then expected to be either flat or show very little growth, meaning that the country narrowly avoids the two quarters of falling GDP that define a recession. The cold snap that has hit Britain has changed all of that.
The chief economic advisor at the Ernst & Young Item Club, Peter Spencer, explains the situation: “We are sliding towards a triple dip recession in my view. The snow is not helping. When the economy is bouncing along the bottom anyway, a bout of bad weather can easily tip it into negative territory.” With people missing work, fewer shoppers heading out and people having to spend more on heating or transport, bad weather can drastically affect the economy.
With the cold snap dragging on and affecting huge swathes of Britain, many people are quickly becoming cynical about Britain’s chances of avoiding a third drop into recession since 2008. IHS Global Insight’s Howard Archer is one of those, blaming “the UK’s ability to grind to a halt with even a flake [of snow]” for “the disruption to economic activity.” He adds that as the snow, ice and freezing conditions continue, it becomes more and more likely that “the first quarter of 2013 will see contraction in GDP”, bad news for everyone in Britain, though a particularly worrying fact for the government, at whose feet this will be laid.