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UK 'on the verge of a triple-dip recession'

UK 'on the verge of a triple-dip recession'

While the pace of economic recovery remains sluggish, an expert has warned that the UK could be on the verge of a triple-dip recession.

European economist at asset management platform Schroders Azad Zangana noted that the economy suffered a double-dip recession in 2012, emphasising the fact that it is currently on the verge of another.

He said that as a result of this, it comes as no surprise that Moody's recently elected to downgrade the UK's credit rating.

The expert added that gilts and sterling have both been under a considerable degree of pressure since the end of 2012.

He explained that this itself had come as a result of speculation that a ratings downgrade was in the pipeline.

Director of forex advisory services at foreign currency exchange brokers HiFX Chris Towner recently argued that sterling is surrounded by negative sentiment.

It was suggested that the currency is weakening as a result of this - and Mr Towner noted that a currency comparison would indicate that sterling has been weakened against the US dollar and the euro.

Mr Zangana drew attention to the three reasons Moody's cited as being behind the reason it downgraded the UK's credit rating.

First of these was a continued weakness in the UK's medium-term growth outlook - and secondly the implications of this, as it could lead to higher levels of debt being accrued in the future.

Finally, the UK's ability to absorb future shocks has deteriorated using the government's own balance sheet.

"Moody's did however revise up its rating outlook back to stable, indicating that the UK would not be downgraded further," Mr Zangana commented.

The expert added: "Overall, this downgrade had been on the cards for some time - and the market reaction this morning suggests there are bigger concerns out there for investors, such as the elections in Italy for example."

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