Unprecedented third slump in four years looms as shoppers stay at home and vital transport links grind to a halt
With the icy blast of cold weather showing no immediate signs of letting up, and some places not expected to see green grass again until next month, the economic forecast is equally gloomy. A series of economic releases – including weak trade data, downbeat business surveys and dreary retail sales – have fuelled concerns that official figures out this week will show that output fell in the final quarter of last year.
Now analysts fear a cold snap in January could lead to another quarter of contraction, plunging the UK into its third recession in four years. As transport services ground to a halt, Britons were unable to get to shops and restaurants, companies shut down early, construction work was hit, and supply chains were disrupted. Howard Archer, chief European and UK economist at IHS Global Insight, said retailers would be particularly hard hit, as the weather disrupted Saturday’s shopping hours.
David Tinsley, UK economist at BNP Paribas, said: “The scary thing is that, as the snow falls in London and widespread disruption beckons, we could yet get a drop in first-quarter GDP as well. We would then be in triple-dip territory, albeit for erratic reasons.” With the Met Office forecasting snow in parts of the country well into next week, the economic hit could be serious. “Clearly, the longer that the snow and ice lasts, the greater will be the negative impact on the economy,” said Archer.