Back in recession

The UK is back in economic recession, according to the Organisation for Economic Co-operation and Development (OECD).

The leading global authority on economic matters has calculated that the UK economy shrunk in the first quarter of 2012, by -0.4%.

This follows an economic contraction of -0.3% in the final quarter of last year.

Economists had been expecting a weak first quarter although they had predicted that the UK economy would avoid a so-called ‘double dip’ recession this year.

The OECD forecast follows revised figures from the Office for National Statistics in respect of the final quarter of last year. They revised their GDP figures downwards from -0.2% to -0.3%, resulting in modest growth of 0.7% for the year as a whole.

Within their interim economic assessment, the OECD also said that the US and Europe are now on separate economic growth tracks.

“Our forecast for the first half of 2012 points to robust growth in the United States and Canada, but much weaker activity in Europe, where the outlook remains fragile,” according to Pier Carlo Padoan, chief economist at the OECD.

He explained that the world economy may have stepped back from the edge of the cliff but there is still no room for complacency.

Whilst it seems increasingly likely that the UK economy will briefly re-enter a period of recession, this does not necessarily result in a negative outlook for investors.

The economy and investment markets are often uncorrelated, with the performance of one not necessarily driving the performance of the other.

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