City Watch: Brian Tora on the UK’s prospects of avoiding a ‘triple dip’ recession

Brian Tora of J M Finn & Co

Brian Tora of J M Finn & Co - Credit: Archant

DESPITE a mixed bag of news, markets got off to an encouraging start this week.

Another ratings agency took a sliver off the UK’s standing in bond markets, but this was shrugged aside. More important, American and Asian markets enjoyed a little surge in confidence, which happily spilled over into early trading here.

This could be quite a busy week for news. First quarter results are beginning to be published. Barclays announces its tomorrow and there are plenty of major companies that will soon be sharing their experience of 2013 so far.

But arguably the most important announcement will coming on Thursday when the Office of National Statistics release the UK’s first quarter economic figures.

What many will be looking for as our Gross Domestic Product numbers are revealed is evidence we have avoided a triple-dip recession. The last quarter of 2012 saw our domestic economy shrink, so we will need to be in positive territory for an official recession to be avoided.

The consensus view is we will manage a plus figure at the end of the day – just. The most popular estimate is for growth of 0.1% – hardly boom conditions, but better than a negative result. The only problem is these figures are notoriously inaccurate, being subject to revision as more details on our economic performance come to light.

But the market – like the weather – seems to be enjoying a sunnier disposition of late. Plenty of potential upsets lurk just over the horizon, but with the corporate world in generally good shape and governments prepared to go on printing money to stave off an economic downturn, who can blame investors for feeling a little more confident. Long may it continue.

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: : Brian Tora is an associate with investment managers JM Finn & Co.