The UK finally emerged from recession in the last quarter of last year, but by the skin of its teeth. GDP posted a quarterly rise of just 0.1%, comparing poorly to the initial rises in output seen in other economies when they recently exited recession. (See Chart.) Growth could pick up at the start of this year, if only because of an easing in the rate of de-stocking. But a renewed fall in GDP cannot be ruled out if we see a VAT-related dip in consumer spending. And with a fiscal squeeze looming, the recovery may struggle to gather momentum, with the UK set to fall further behind its counterparts.
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