The risk of UK recession next year is 'significantly elevated'

Reuters

The UK is facing a technical recession - two consecutive quarters of negative growth - as early as next year, according to an influential economic research group.

The National Institute of Economic and Social Research said it estimated UK GDP grew by just 0.3% in the three months to August, down from 0.4% in July.

The figures suggest that the UK economy is flatlining.

"For the year to date, economic growth in the UK has been subdued compared to recent history, and the economy has been flat since April," NIESR said in a statement on its website.

"Given this, the probability of a technical recession before the end of 2017 remains significantly elevated," said NIESR.

Here is the chart:

NIESR

The estimate contrasts with recent readings of economic activity, which were good enough to lead both Credit Suisse and Morgan Stanley to row back on their predictions of a so-called 'Brecession."

In the last week alone, IHS Markit's PMI surveys for all three crucial sectors of the economy - services, manufacturing, and construction - have bounced back from disastrous figures in July.

Rebecca Piggott, research fellow at NIESR, said: "The evidence on the current state of the economy post-referendum is limited, but on balance these data suggest that the UK economy is in the midst of a slowdown."