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UK GDP output declining in February

Monthly estimates of gross domestic product (GDP) from the National Institute of Economic and Social Research (NIESR) indicate that the UK economy is continuing to flatline.

It was specified that this applies to the first two months of this year - and the negative output gap has continued to widen.

The data suggested that GDP output fell 0.1 per cent in the three-month period ending in February. This could be interpreted as a particularly troubling figure following the contraction of 0.2 per cent in the three months ending January 2013.

A separate report recently published by Eurostat revealed that the European Union as a whole remains in recession conditions.

Estimates for the fourth quarter of 2012 indicated that eurozone GDP was down by 0.6 per cent, while the overall data for all 27 member states - including those outside the single currency bloc - showed a decline of 0.5 per cent

Ian Winship, head of sterling bonds and manager of the BlackRock Absolute Return Bond Fund said: "We expect weaker data, particularly in Europe, to be met with further action by the European Central Bank - and more easing should follow."

NIESR asserted that it still expects the UK's economy to grow throughout 2013. Indeed, a quarterly forecast published by the firm last month predicted growth of as high as 0.7 per cent per annum this year.

Indeed, the firm stated that it expects this trend to be sustained in the long term, with a 1.5 per cent growth to be enjoyed in 2014.

"The National Institute interprets the term 'recession' to mean a period when output is falling or receding, while 'depression' is a period when output is depressed below its previous peak. Thus, unless output turns down again, the recession is over, while the period of depression is likely to continue for some time," a statement from the NIESR read.

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