Britain May Escape Triple-Dip Recession Despite Challenging Economic Climate

The UK economy is likely to avoid a triple-dip recession in the first quarter, despite forecasts of subdued growth in 2013, according to several surveys published ahead of the release of official statistics on 25 April.

A survey of economists by Bloomberg revealed that the UK's gross domestic product (GDP) edged up 0.1 percent sequentially in the first quarter. On a year-on-year basis, the growth rate was 0.4 percent.

In the fourth quarter of 2012, the country's economic growth declined for the second consecutive quarter, falling by 0.3 percent and technically re-entering recession.

Earlier, a Reuters poll of economists and a survey by the National Institute of Economic and Social Research (NIESR) also suggested 0.1 percent growth in the first quarter.

Nevertheless, the country still faces a rising fiscal deficit, high unemployment and weak demand from key European markets. On 19 April, credit rating agency Fitch downgraded the country's rating to AA+ from AAA, citing a weaker economic and fiscal outlook.

Fitch also revised down its forecast for UK economic growth in 2013 and 2014 to 0.8 percent and 1.8 percent, respectively, from 1.5 percent and 2 percent at the time of the last review of the country's sovereign ratings in September 2012.

"The UK economy is not expected to reach its 2007 level of real GDP until 2014, underscoring the weakness of the economic recovery," Fitch said.

"The fiscal space to absorb further adverse economic and financial shocks is no longer consistent with an AAA rating."

Earlier, the International Monetary Fund cut its economic outlook on the UK to 0.7 percent growth, suggesting that the Bank of England (BoE) should consider increasing stimulus.

British consumers have reined in their spending due to rising unemployment and falling real wages. Unemployment is expected to reach 7.9 percent in 2013 and 2014.

The government has been relying on the BoE to support growth with low interest rates and quantitative easing, or printing money to buy bonds.