The UK could be set for a triple-dip recession once the benefits of the London Olympics wear off, economists have warned.
They fear that the eurozone crisis could push the country back into recession as soon as spring 2013, fuelled by a Greek exit early next year.
Schroders chief economist Azad Zangana believes that GDP will rise by 0.5 per cent in the current quarter, following on from 0.7 per cent fall seen between April and June 2012.
Speaking to The Sunday Times, Zangana said the economy will continue to grow until March 2013, before being hit by another two quarters of negative growth.
He says: “A renewed crisis in the eurozone will lead to a further collapse in business confidence and investment.”
Citigroup economist Michael Saunders says GDP will grow by 0.3 per cent in 2013, down from his initial forecast of 0.5 per cent, increasing the risk of a triple dip.
He says: “My guess is that for the next few quarters, after a technical bounce in the third quarter, the economy will be roughly flat, which I would describe as a disastrously bad outcome compared with previous cycles.”
Earlier this month, the International Monetary Fund cut its growth forecast for the UK by 0.6 per cent for 2012 and 2013.
In its quarterly economic report, the IMF chopped the UK’s growth forecast from 0.8 to 0.2 per cent in 2012 and from 2 to 1.4 per cent in 2013. The falls are in comparison to its April forecast.